Maple Limited (Maple) was incorporated on January 2, Year 1, and commenced active operations immediately in Greece. Common shares were issued on the date of incorporation for 100,000 euros (), and no more common shares have been issued since then.

On December 31, Year 4, the Oak Company (Oak) purchased 100% of the outstanding common shares of Maple. The balance sheet for Maple at December 31, Year 10, was as follows:

Cash		100,000
Accounts receivable (Note 1)		200,000
Inventory (Note 2)		300,000
Equipment (net) (Note 3)		1,100,000
		1,700,000
Accounts payable		250,000
Bonds payable (Note 4)		700,000
Common shares		100,000
Retained earnings		650,000
		1,700,000

Notes and Additional Information

• The accounts receivable relate to sales occurring evenly throughout the month of December, Year 10.
• Maple uses the FIFO method to account for its inventory. The inventory available for sale during the year was purchased as follows:

Date of purchase	Cost of purchase	Exchange rate
Dec. 31, Year 9	100,000	1 = $1.56
March 1, Year 10	1,000,000	1 = $1.60
November 1, Year 10	180,000	1 = $1.63

• The equipment was purchased on May 26, Year 4.
• The bonds were issued on May 26, Year 4, to finance the purchase of the equipment.
• Maple reported net income of 200,000, which was earned evenly throughout the year, and paid dividends of 160,000 on July 1, Year 10.
• Foreign exchange rates were as follows:

January 2, Year 1	1 = $1.30
May 26, Year 4	1 = $1.40
December 31, Year 4	1 = $1.42
December 31, Year 9	1 = $1.56
July 1, Year 10	1 = $1.61
Average for Year 10	1 = $1.59
Average for December Year 10	1 = $1.64
December 31, Year 10	1 = $1.66

Required:

(a) Translate the balance sheet of Maple at December 31, Year 10, into Canadian dollars assuming that Maple's functional currency is the Canadian dollar. Assume that the translated balance sheet will be consolidated with Oak's balance sheet. For retained earnings, simply use the amount required to balance your balance sheet. (Round the "Rate" to 2 decimal places and "C$" to nearest whole number. Enter answers in whole number and not in millions. Omit $ sign in your response.)

MAPLE LIMITED
Balance Sheet
December 31, Year 10
		Rate	C$
Cash	100,000
Accounts receivable	200,000
Inventory	180,000
	120,000
Equipment net	1,100,000
	1,700,000
Accounts payable	250,000
Bonds payable	700,000
Common shares	100,000
Retained earnings (to balance)	650,000
	1,700,000

(b) Calculate the foreign exchange gain or loss on the bonds payable for the year ended December 31, Year 10, and state how it would be reported on the year-end financial statements. (Enter answers in whole number and not in millions. Input all amounts as positive value. Omit $ sign in your response.)

(Click to select) Exchange loss Exchange gain $

(c) Prepare an independent calculation of the unrealized exchange gains or losses that would be reported in other comprehensive income for Year 10, assuming that Maple's functional currency is the euro. (Input all amounts as positive values. Round the "Rate" to 2 decimal places and "C$" to nearest whole number. Enter answers in whole number and not in millions. Omit $ sign in your response.)

Items subject to exchange rate exposure (= shareholders equity):

		Rate	C$
Beginning
Net income
Dividends
Calculated
Actual
(Click to select) Exchange loss Exchange gain

(d) Since the PCT method uses the closing rate to translate equipment, the translated amount should represent the fair value of the equipment in Canadian dollars. Do you agree or disagree?

• Agree

• Disagree