On December 31, 2016, Terrace Inc. of Canada, paid four million Australian dollars (A$4,000,000) to acquire 80% of the outstanding common shares of Tasmanian Toys, an Australian company.On that date the fair values of Tasmanian Toys identifiable assets and liabilities were equal to their carrying values.Tasmanian Toys had common shares of A$3,000,000 and retained earnings of A$1,200,000 on the acquisition date.

Following are thecomparative statements of financial position for Tasmanian Toys as at December 31, 2016 and 2017, and the company's income statement for the year ended on December 31, 2017 (in Australian dollars):