On January 1, Year 4, Par Company purchased all the outstanding common shares of Bayshore Company, located in California, for US$170,000. The carrying amount of Bayshores shareholders equity on January 1, Year 4, was US$130,000. The fair value of Bayshores plant and equipment was US$15,000 more than carrying amount, and the plant and equipment are being depreciated over 10 years, with no salvage value. The remainder of the acquisition differential is attributable to a trademark, which will be amortized over 10 years. During Year 4, Bayshore earned US$30,000 in income and declared and paid US$13,000 in dividends on December 1, Year 4. Par uses the equity method to account for its investment in Bayshore. Management has determined that the Canadian dollar is the recording, functional and presentation currency for Par Company. The exchange rates were as follows throughout the year:

Jan. 1, Year 4	US$1 = C$0.99
Dec. 1, Year 4	US$1 = C$0.96
Dec. 31, Year 4	US$1 = C$0.95
Average for year	US$1 = C$0.97

Required:

(a) Assume that the Canadian dollar is the functional currency for Bayshore Company. (Negative amounts and deductions should be indicated by a minus sign. Omit $ sign in your response.)

(i) Prepare a schedule showing the differential allocation and amortization for Year 4. The schedule should present both Canadian dollars and U.S. dollars.

US$

C$

US$

C$

US$

C$

At date of acquisition

Cost of acquisition

$

$

NBV of net assets

Acquisition differential

Changes in Year 4

Balance, end of year

Allocated to:

Plant & equipment

Trademarks

Total allocated

(ii) Prepare Par Company's journal entry for adjustments pertaining to the changes to the acquisition differential for Year 4.

General Journal	Debit	Credit
To record Pars share of changes to acquisition differential for Year 4.
(Click to select) Investment in Bayshore Equity method income Retained earnings Trademarks Dividends Depreciation expense Common shares Plant & equipment
(Click to select) Trademarks Retained earnings Dividends Depreciation expense Common shares Equity method income Investment in Bayshore Plant & equipment

(b) Assume that the U.S. dollar is the functional currency for Bayshore Company.

(i) Prepare a schedule showing the differential allocation and amortization for Year 4. The schedule should present both Canadian dollars and U.S. dollars. (Negative amounts and deductions should be indicated by a minus sign. Round final answers to nearest whole number. Omit $ sign in your response.)

US$

C$

US$

C$

US$

C$

At date of acquisition

Cost of acquisition

$

$

NBV of net assets

Acquisition differential

Changes in Year 4

Balance, end of year

Allocated to:

Plant & equipment

Trademarks

Total allocated

$

$

$

(ii) Prepare Par Company's journal entry for adjustments pertaining to the changes to the acquisition differential for Year 4.

Event	General Journal	Debit	Credit
(1)	To record Pars share of changes to acquisition differential for Year 4.
	(Click to select) Equity method income Common shares Investment in Bayshore Dividends Retained earnings Trademarks Plant & equipment Depreciation expense
	(Click to select) Equity method income Plant & equipment Investment in Bayshore Trademarks Dividends Depreciation expense Common shares Retained earnings
(2)	To record Pars share of exchange loss from translating at closing rate.
	(Click to select) Trademarks Dividends Other comprehensive income - exchange loss Plant & equipment Common shares Retained earnings Investment in Bayshore Depreciation expense
	(Click to select) Investment in Bayshore Trademarks Other comprehensive income - exchange loss Depreciation expense Dividends Common shares Retained earnings Plant & equipment