On January 1, 20X1, Par Company purchased all the outstanding stock of South Bay Company, located in Canada, for $129,600. On January 1, 20X1, the direct exchange rate for the Canadian dollar (C$) was C$1 = $0.81. South Bays book value on January 1, 20X1, was C$83,000. The fair value of South Bays plant and equipment was C$9,900 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 20X1, South Bay earned C$28,000 in income and declared and paid C$7,800 in dividends. The dividends were declared and paid in Canadian dollars when the exchange rate was C$1 = $0.75. On December 31, 20X1, Par continues to hold the Canadian currency received from the dividend. On December 31, 20X1, the direct exchange rate is C$1 = $0.64. The average exchange rate during 20X1 was C$1 = $0.76. Management has determined that the Canadian dollar is South Bays appropriate functional currency. Required: a. Prepare a schedule showing the differential allocation and amortization for 20X1. The schedule should present both Canadian dollars and U.S. dollars. (Amounts to be deducted should be entered with a minus sign. Round "Exchange Rate" answers to 2 decimal places and rest of answers to nearest whole dollar.)

b. Par uses the fully adjusted equity method to account for its investment. Provide the entries that it would record in 20X1 for its investment in South Bay for the following items: (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to nearest whole dollar.)

c. Prepare a schedule showing the proof of the translation adjustment for South Bay as a result of the translation of the subsidiarys 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 subsidiarys accounts. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Amounts to be deducted should be entered with a minus sign. Round "Exchange Rate" answers to 2 decimal places and rest of answers to nearest whole dollar.)

d. Provide the entry required by Par to restate the C$7,800 in the Foreign Currency Units account into its year-end U.S. dollarequivalent value. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to nearest whole dollar.)

Answer is complete and correct Exchange Canadian U.S. Dollars Rate Dollars $ 129,600 Investment cost $ C 160,000 0.81 Book value of investment on January 1, 20X1 83,000 0.81 67,230 Differential 77,000 62,370 C X Answer is not complete. Exchange Rate Canadian Dollars U.S. Dollars Plant and Plant and Trademark Trademark equipment equipment Income Statement: Differential at date of acquisition: Amortization this period: (10 years) Remaining balance Balance Sheet: C 9,900 C 0.81 S 8,019 C (990) 0.76 (752) 8,910 S C C 7,267 C Remaining balance on 12/31/X1 translated at year-end exchange rates: C 8,910 C 0.64 5,702 C Difference to OCI-translation adjustment: 1,565 C A A X Answer is not complete. No Event General Journal Debit Credit Investment in South Bay Company A Cash Investment in South Bay Company B 2 C 3 Foreign currency units (C$) Investment in South Bay Company Income from South Bay Company D 4 Investment in South Bay Company Other comprehensive income - Translation adjustment E Investment in South Bay Company LO X Answer is not complete. PAR COMPANY AND SUBSIDIARY Proof of Translation Adjustment Year Ended December 31, 20X1 Canadian Exchange Rate U.S. Dollars Dollars Net assets at beginning of year, 1/1/Xx1 Adjustment for changes in assets position during year: Net income for year C Dividends paid Net assets translated at rates in effect for those items Net assets at end of year $ 0 C Change in other comprehensive income translation adjustment during year - net decrease (debit) X Answer is not complete. No Event General Journal Debit Credit Other comprehensive income Translation adjustment Investment in South Bay Company A 1 X Answer is not complete. No Event General Journal Debit Credit Foreign currency transaction loss A 1 Foreign currency units (C$) Answer is complete and correct Exchange Canadian U.S. Dollars Rate Dollars $ 129,600 Investment cost $ C 160,000 0.81 Book value of investment on January 1, 20X1 83,000 0.81 67,230 Differential 77,000 62,370 C X Answer is not complete. Exchange Rate Canadian Dollars U.S. Dollars Plant and Plant and Trademark Trademark equipment equipment Income Statement: Differential at date of acquisition: Amortization this period: (10 years) Remaining balance Balance Sheet: C 9,900 C 0.81 S 8,019 C (990) 0.76 (752) 8,910 S C C 7,267 C Remaining balance on 12/31/X1 translated at year-end exchange rates: C 8,910 C 0.64 5,702 C Difference to OCI-translation adjustment: 1,565 C A A X Answer is not complete. No Event General Journal Debit Credit Investment in South Bay Company A Cash Investment in South Bay Company B 2 C 3 Foreign currency units (C$) Investment in South Bay Company Income from South Bay Company D 4 Investment in South Bay Company Other comprehensive income - Translation adjustment E Investment in South Bay Company LO X Answer is not complete. PAR COMPANY AND SUBSIDIARY Proof of Translation Adjustment Year Ended December 31, 20X1 Canadian Exchange Rate U.S. Dollars Dollars Net assets at beginning of year, 1/1/Xx1 Adjustment for changes in assets position during year: Net income for year C Dividends paid Net assets translated at rates in effect for those items Net assets at end of year $ 0 C Change in other comprehensive income translation adjustment during year - net decrease (debit) X Answer is not complete. No Event General Journal Debit Credit Other comprehensive income Translation adjustment Investment in South Bay Company A 1 X Answer is not complete. No Event General Journal Debit Credit Foreign currency transaction loss A 1 Foreign currency units (C$)