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$20$

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On January $1,20$X$1,$ Par Company purchased all the outstanding stock of South Bay Company, located in Canada, for $$129,600.$ On January $1,20$X$1,$ the direct exchange rate for the Canadian dollar $($C$$)$ was C$$1=$ $$0\mathrm{.}81.$ South Bay$$s book value on January $1,20$X$1,$ was C$$99,000.$ The fair value of South Bay$$s plant and equipment was C$$9,300$ more than book value, and the plant and equipment are being depreciated over $10$ years with no salvage value. The remainder of the differential is attributable to a trademark, which will be amortized over $10$ years.

During $20$X$1,$ South Bay earned C$$25,000$ in income and declared and paid C$$8,300$ in dividends. The dividends were declared and paid in Canadian dollars when the exchange rate was C$$1=$ $$0\mathrm{.}75.$ On December $31,20$X$1,$ Par continues to hold the Canadian currency received from the dividend. On December $31,20$X$1,$ the direct exchange rate is C$$1=$ $$0\mathrm{.}64.$ The average exchange rate during $20$X$1$ was C$$1=$ $$0\mathrm{.}76.$ Management has determined that the Canadian dollar is South Bay$$s appropriate functional currency.

Required:

Prepare a schedule showing the differential allocation and amortization for $20$X$1.$ The schedule should present both Canadian dollars and U$.$S$.$ dollars.

Par uses the fully adjusted equity method to account for its investment. Provide the entries that it would record in $20$X$1$ for its investment in South Bay for the following items:

Prepare a schedule showing the proof of the translation adjustment for South Bay as a result of the translation of the subsidiary$$s accounts from Canadian dollars to U$.$S$.$ dollars. Then provide the entry that Par would record for its share of the translation adjustment resulting from the translation of the subsidiary$$s accounts.

Provide the entry required by Par to restate the C$$8,300$ in the Foreign Currency Units account into its year$-$end U$.$S$.$ dollar$$equivalent value.