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Assignment # 3 Nova Corporation is a Canadian public company that also has many foreign investors, primarily from Ireland. On December 3 1 , 2
Assignment #
Nova Corporation is a Canadian public company that also has many foreign investors, primarily from Ireland. On December Nova purchased of the outstanding common shares of Piscari Company of Dublin, Ireland. Assume that the carrying values of Piscaris assets and liabilities equaled their fair values and that there was no goodwill associated with the acquisition. Piscari began operations and issued its common shares and bonds in Ireland on January Piscari had many local investors in Ireland and is a very popular maker of flyfishing equipment. Piscari sells its products throughout Europe, including of its sales in Ireland. The following are the and summarized financial statements of Piscari in euros
Cash
Accounts receivable
Inventory
Machinery, net
Accounts Payable
Bonds Payable
Common Shares
Retained Earnings
Sales
Cost of goods sold
Gross Profit
Amortization Expense
Interest Expense
Other Expenses
Net Income
The following exchange rates were noted:
January C$
December C$
December C$
Average, December C$
October C$
December C$
Average, December C$
Average for C$
Piscari purchases its raw materials locally in Ireland. To improve its productivity, on December Piscari replaced all of its packaging equipment with stateoftheart machinery from Kilkenny, Ireland all machinery was amortized on a straightline basis over years Piscari issued of common shares on October Piscaris ending inventory for and was purchased evenly over the month of December of each year, respectively. Piscari declared dividends on October paid on December Sales, purchases, interest and other expenses occurred evenly throughout the year.
Required:
a Translate the following financial statement items using the functional currency translation FCT method.
i Machinery, net
ii Bonds payable
iii. Accounts receivable
b Provide a detailed calculation of the translation gain or loss arising in under the functional currency translation FCT method.
c Translate the following financial statement items using the presentation currency translation PCT method.
i Amortization expense
ii Common shares
iii Dividends
iv Inventory
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