On January 1, 2018, Patricia limited of Canada acquired 100% of the outstanding shares of Silas Limited of Belgium. The foreign currency is referred to as the Euro or . Assume for simplicity that on that date, the fair values of Silass identifiable assets and liabilities were equal to their carrying values. Silass December 31 balance sheets for 2019 and 2018, and its statement of income for 2019 are as follows (all numbers are in 000s of ):

Silas Ltd Balance Sheet as at

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December 31

Assets 2019 2018 000s 000s Cash 120 90 Accounts Receivable 240 180 Inventory 300 260 Prepaid Expenses 110 80 Property, Plant and Equipment (net) 980 900 1,750 1,510 Liabilities and Shareholders equity Accounts Payable 150 130 Bonds Payable 170 160 Common Shares

400 400 Retained Earnings 1,030 820 1,750 1,510

Sales 1,800 Cost of goods sold 720 Gross Profit 1,080 Operating Expenses including interest and taxes 460 Depreciation 120 Net Income 500

Additional Information a) Inventory is accounted for on a FIFO basis and all inventory on hand on December 31, 2019 and December 31, 2018 were purchased evenly throughout the month of December, 2019 and December, 2018 respectively. Assume all Sales and purchases occurred evenly throughout the year.

b) The Property, Plant and Equipment on hand as at December 31, 2018 were originally

acquired for 1,000,000 on January 1, 2018 and have a 10-year useful life. The company purchased a machine on January 1, 2019 and the machine was delivered on the same day. This machine also has a 10-year useful life from the date of purchase. The company uses straight line depreciation.

c) Prepaid expenses as at December 31, 2019 reflect prepaid insurance purchased on October 31, 2019.

d) Dividends were also declared and paid on October 31, 2019.

Relevant exchange rates are as follows:

January 1, 2018 1= C$ 1.51 Average for Dec. 2018 1= C$ 1.54 December 31, 2018 1= C$ 1.56 Average for 2018 1= C$ 1.53 October 31, 2019 1= C$ 1.47 Average for Dec. 2019 1= C$ 1.48 December 31, 2019 1= C$ 1.46 Average for 2019 1= C$ 1.50

Required :

a) Assume that Silass functional currency is the Canadian dollar: i. Calculate the exchange gain (loss) that would result from the translation of Silass

financial statements for the year ending December 31, 2019 .

ii. What amount in Canadian Dollars will Patricia report for Silass cost of goods sold for the translated Income Statement for the year ending December 31, 2019? .

b) Assume Silass functional currency is the Euro (): i. What amount in Canadian dollars will Patricia report for Prepaid Expenses in the

translated Balance Sheet as at December 31, 2019 ii. In one sentence, explain how any gain or loss arising from the translation of Silass

operations will impact Patricias Consolidated Financial Statements for the year ending December 31, 2019