Assignment #$3$

Nova Corporation is a Canadian public company that also has many foreign investors, primarily from Ireland. On December $31,2022,$ Nova purchased $60\%$ of the outstanding common shares of Piscari Company of Dublin, Ireland. $($Assume that the carrying values of Piscari$$s 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 $1,2017.$ Piscari had many local investors in Ireland and is a very popular maker of flyfishing equipment. Piscari sells its products throughout Europe, including $30\%$ of its sales in Ireland. The following are the $2023$ and $2022$ summarized financial statements of Piscari in euros $().$

$20232022$

Cash $90,00040,000$

Accounts receivable $120,000100,000$

Inventory $90,000120,000$

Machinery, net $300,000360,000$

$600,000620,000$

Accounts Payable $90,000130,000$

Bonds Payable $300,000300,000$

Common Shares $160,000150,000$

Retained Earnings $50,00040,000$

$600,000620,000$

Sales $1,800,000$

Cost of goods sold $1,200,000$

Gross Profit $600,000$

Amortization Expense $(60,000)$

Interest Expense $(20,000)$

Other Expenses $(450,000)$

Net Income $70,000$

The following exchange rates were noted:

January $1,20171=$ C$$1\mathrm{.}60$

December $31,20181=$ C$$1\mathrm{.}50$

December $31,20221=$ C$$1\mathrm{.}40$

Average, December $20221=$ C$$1\mathrm{.}41$

October $31,20231=$ C$$1\mathrm{.}34$

December $31,20231=$ C$$1\mathrm{.}30$

Average, December $20231=$ C$$1\mathrm{.}33$

Average for $20231=$ C$$1\mathrm{.}35$

Piscari purchases its raw materials locally in Ireland. To improve its productivity, on December $31,2018,$ Piscari replaced all of its packaging equipment with state$-$of$-$the$-$art machinery from Kilkenny, Ireland $($all machinery was amortized on a straight$-$line basis over $6$ years$).$ Piscari issued $10,000$ of common shares on October $31,2023.$ Piscari$$s ending inventory for $2022$ and $2023$ was purchased evenly over the month of December of each year, respectively. Piscari declared dividends on October $31,2023($paid on December $31,2023).$ Sales, purchases, interest and other expenses occurred evenly throughout the year.

Required:

$($a$)$ Translate the following $2023$ 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 $2023$ under the functional currency translation $($FCT$)$ method.

$($c$)$ Translate the following $2023$ financial statement items using the presentation currency translation $($PCT$)$ method.

i$)$ Amortization expense

ii$)$ Common shares

iii$)$ Dividends

iv$)$ Inventory