Cancorp Ltd., a public company, purchased 90% of the shares of Forsub Inc. (Forsub) on January 1, 2019. Forsub is located in New Zealand. The financial statements of Forsub as at December 31, 2020, are as follows: Forsub Inc. Statement of financial position As at December 31, 2020 Cash Accounts receivable Inventory Fixed assets Accumulated depreciation NZ$ 150,000 175,000 650,000 1,480,000 (520,000) NZ$1,935,000 Current liabilities Long-term liabilities Common shares Retained earnings NZ$ 125,000 300,000 100,000 1,410,000 NZ$1,935,000 Forsub Inc. Statement of comprehensive income For the year ended December 31, 2020 Sales Cost of goods sold Depreciation Interest expense Other Gain on sale of fixed assets Net income and comprehensive income NZ$700,000 (450,000) (70,000) (28,000) (72,000) 20.000 NZ$100,000 | Additional information: 1. The inventory is recorded on a first in, first out basis. The 2020 opening inventory included: NZ$175,000 at NZ$1 = C$0.700 NZ$200,000 at NZ$1 = C$0.729 The purchases during 2020 were: NZ$350,000 at NZ$1 = C$0.686 NZ$240,000 at NZ$1 = C$0.660 NZ$135,000 at NZ$1 = C$0.673 2. The fixed asset account is composed of land costing NZ$345,000, purchased when the exchange rate was NZ$1 = C$0.449, and buildings and equipment costing NZ$1,135,000, purchased when the exchange rate was NZ$1 = C$0.479. There have been NO fixed asset acquisitions since January 1, 2019. 3. On April 1, 2020, fixed assets were sold for proceeds of NZ$40,000. 4. Dividends of NZ$40,000 were declared and paid on December 31, 2020. 5. The net monetary assets at the beginning of the year were NZ$25,000. 6. Exchange rates were as follows: January 1, 2019 NZ$1 = C$0.625 Average in 2019 NZ$1 = C$0.673 December 31, 2019 NZ$1 = C$0.745 April 1, 2020 NZ$1 = C$0.725 Average in 2020 NZ$1 = C$0.686 December 31, 2020 NZ$1 = C$0.660 Required: a) Assume that Forsub's functional currency is the Canadian dollar. Prepare a translated statement of comprehensive income for the year ended December 31, 2020. (11 marks) b) Assume that Forsub's functional currency is the New Zealand dollar. Calculate the foreign exchange gain or loss for the year ended December 31, 2020. Indicate where this foreign exchange gain or loss would appear on the statement of comprehensive income. (3 marks) Cancorp Ltd., a public company, purchased 90% of the shares of Forsub Inc. (Forsub) on January 1, 2019. Forsub is located in New Zealand. The financial statements of Forsub as at December 31, 2020, are as follows: Forsub Inc. Statement of financial position As at December 31, 2020 Cash Accounts receivable Inventory Fixed assets Accumulated depreciation NZ$ 150,000 175,000 650,000 1,480,000 (520,000) NZ$1,935,000 Current liabilities Long-term liabilities Common shares Retained earnings NZ$ 125,000 300,000 100,000 1,410,000 NZ$1,935,000 Forsub Inc. Statement of comprehensive income For the year ended December 31, 2020 Sales Cost of goods sold Depreciation Interest expense Other Gain on sale of fixed assets Net income and comprehensive income NZ$700,000 (450,000) (70,000) (28,000) (72,000) 20.000 NZ$100,000 | Additional information: 1. The inventory is recorded on a first in, first out basis. The 2020 opening inventory included: NZ$175,000 at NZ$1 = C$0.700 NZ$200,000 at NZ$1 = C$0.729 The purchases during 2020 were: NZ$350,000 at NZ$1 = C$0.686 NZ$240,000 at NZ$1 = C$0.660 NZ$135,000 at NZ$1 = C$0.673 2. The fixed asset account is composed of land costing NZ$345,000, purchased when the exchange rate was NZ$1 = C$0.449, and buildings and equipment costing NZ$1,135,000, purchased when the exchange rate was NZ$1 = C$0.479. There have been NO fixed asset acquisitions since January 1, 2019. 3. On April 1, 2020, fixed assets were sold for proceeds of NZ$40,000. 4. Dividends of NZ$40,000 were declared and paid on December 31, 2020. 5. The net monetary assets at the beginning of the year were NZ$25,000. 6. Exchange rates were as follows: January 1, 2019 NZ$1 = C$0.625 Average in 2019 NZ$1 = C$0.673 December 31, 2019 NZ$1 = C$0.745 April 1, 2020 NZ$1 = C$0.725 Average in 2020 NZ$1 = C$0.686 December 31, 2020 NZ$1 = C$0.660 Required: a) Assume that Forsub's functional currency is the Canadian dollar. Prepare a translated statement of comprehensive income for the year ended December 31, 2020. (11 marks) b) Assume that Forsub's functional currency is the New Zealand dollar. Calculate the foreign exchange gain or loss for the year ended December 31, 2020. Indicate where this foreign exchange gain or loss would appear on the statement of comprehensive income