QUESTION 6 On January 1, Year 2, P Ltd paid $300,000 for 100% of the outstanding shares of S Ltd., a foreign subsidiary. S Ltd. has full autonomy and operates in an industry different to that of the parent with all its suppliers and customers residing outside Canada with no business relation with P Ltd. On the date of acquisition, S's fair values approximated its book values. Both companies have December 31 year-end. S's financial statements for Year 7 are shown below: Balance Sheet As at December 31, Year 7 (in FC) Current Monetary Assets 500,000 Inventory 120,000 Plant and Equipment (Net) 380,000 Total Assets 1,000,000 Current Liabilities 170,000 Loan Payable 300,000 Common Stock 200.000 Retained Earnings 330,000 Total Liabilities and Equity I 1,000,000 Income Statement For the Year Ended December 31, Year 7 (in FC) Sales 700.000 Inventory, January 1. Year 7 70.000 Purchases 300,000 Inventory, December 31, Year 7 (120.000) Cost of Goods Sold 250,000 Depreciation Expense 100,000 Other Expenses 150.000 500.000 Net Income 200,000 Other information: S declared and paid FC 50.000 in dividends on September 30, Year 7 when the exchange rate was 1FC=1.38 CDN; The inventories on hand at the end of year 7 were purchased when the exchange rate was 1FC = $1.35 CDN; Net Income Other information: 500,000 200,000 S declared and paid FC 50,000 in dividends on September 30, Year 7 when the exchange rate was 1FC=1.36 CDN; The inventories on hand at the end of year 7 were purchased when the exchange rate was 1FC = $1.35 CDN; The inventories on hand at the end of Year 6 were purchased when the exchange rate was 1FC = $1.31 CDN; All Plant and Equipment in the books was purchased on June 30, Year 4 when exchange rate was 1FC = 1.29 CDN; Balance of Net Monetary Assets on December 31, Year 6 was (170,000FC ) liability position. Balance of Net Assets on Dec 31, Year 6 was 380,000 FC Other Exchange Rates: January 1, Year 2 (date of acquisition): December 31, Year 6: January 1, year 7: December 31, year 7: Average for year 7: 1FC = $1.28 CDN 1FC = $1.31 CDN 1FC = $1.31 CDN 1FC = $1.37 CDN 1FC = $1.34 CDN YOUR ANSWERS TO THE FOLLOWING: Enter amounts without $ sign and no commas eg $1,300,000 enter as 1300000 If using FTC method what are the translated account balances of A. Inventory as at Dec 31, Year 7 is B. Common Stock as at Dec 31, Year 7 is C. Depreciation Expense for the year ended Dec 31, Year 7 is If using PCT method what are the translated account balances of D. COGS for year ended Dec 31, Year 7 is E. Depreciation Expense for year ended Dec 31, Year 7 is F. Bonds Payable as at Dec 31, Year 7 is QUESTION 6 On January 1, Year 2, P Ltd paid $300,000 for 100% of the outstanding shares of S Ltd., a foreign subsidiary. S Ltd. has full autonomy and operates in an industry different to that of the parent with all its suppliers and customers residing outside Canada with no business relation with P Ltd. On the date of acquisition, S's fair values approximated its book values. Both companies have December 31 year-end. S's financial statements for Year 7 are shown below: Balance Sheet As at December 31, Year 7 (in FC) Current Monetary Assets 500,000 Inventory 120,000 Plant and Equipment (Net) 380,000 Total Assets 1,000,000 Current Liabilities 170,000 Loan Payable 300,000 Common Stock 200.000 Retained Earnings 330,000 Total Liabilities and Equity I 1,000,000 Income Statement For the Year Ended December 31, Year 7 (in FC) Sales 700.000 Inventory, January 1. Year 7 70.000 Purchases 300,000 Inventory, December 31, Year 7 (120.000) Cost of Goods Sold 250,000 Depreciation Expense 100,000 Other Expenses 150.000 500.000 Net Income 200,000 Other information: S declared and paid FC 50.000 in dividends on September 30, Year 7 when the exchange rate was 1FC=1.38 CDN; The inventories on hand at the end of year 7 were purchased when the exchange rate was 1FC = $1.35 CDN; Net Income Other information: 500,000 200,000 S declared and paid FC 50,000 in dividends on September 30, Year 7 when the exchange rate was 1FC=1.36 CDN; The inventories on hand at the end of year 7 were purchased when the exchange rate was 1FC = $1.35 CDN; The inventories on hand at the end of Year 6 were purchased when the exchange rate was 1FC = $1.31 CDN; All Plant and Equipment in the books was purchased on June 30, Year 4 when exchange rate was 1FC = 1.29 CDN; Balance of Net Monetary Assets on December 31, Year 6 was (170,000FC ) liability position. Balance of Net Assets on Dec 31, Year 6 was 380,000 FC Other Exchange Rates: January 1, Year 2 (date of acquisition): December 31, Year 6: January 1, year 7: December 31, year 7: Average for year 7: 1FC = $1.28 CDN 1FC = $1.31 CDN 1FC = $1.31 CDN 1FC = $1.37 CDN 1FC = $1.34 CDN YOUR ANSWERS TO THE FOLLOWING: Enter amounts without $ sign and no commas eg $1,300,000 enter as 1300000 If using FTC method what are the translated account balances of A. Inventory as at Dec 31, Year 7 is B. Common Stock as at Dec 31, Year 7 is C. Depreciation Expense for the year ended Dec 31, Year 7 is If using PCT method what are the translated account balances of D. COGS for year ended Dec 31, Year 7 is E. Depreciation Expense for year ended Dec 31, Year 7 is F. Bonds Payable as at Dec 31, Year 7 is