On January 1, 2020, Larmer Corp The Following Exchange Rates Were in Effect During 2020

question 13

Essay

On January 1, 2020, Larmer Corp. (a Canadian company) purchased 80% of Martin Inc, an American company, for US$50,000.
Martin's book values approximated its fair values on that date except for plant and equipment, which had a fair value of US$30,000 with a remaining life expectancy of 5 years. A goodwill impairment loss of US$1,000 occurred during 2020. Martin's January 1, 2020 Balance Sheet is shown below (in U.S. dollars):
$\begin{array}{|l|r|}\hline \text { Current Monetary Assets } & \$ 50,000 \\\hline \text { Inventory } & \$ 40,000 \\\hline \text { Plant and Equipment } & \$ 25,000 \\\hline \text { Total Assets } & \$ 115,000 \\\hline \text { Current Liabilities } & \$ 45,000 \\\hline \text { Bonds Payable (maturity: January 1,2026) } & \$ 20,000 \\\hline \text { Common Shares } & \$ 30,000 \\\hline \text { Retained Earnings } & \$ 20,000 \\\hline \text { Total Liabilities and Equity } & \$ 115,000 \\\hline\end{array}$ The following exchange rates were in effect during 2020:
$\begin{array}{|l|r|}\hline \text { Tanuary 1, 2020: } & \text { US \$1=CDN } \$ 1.3250 \\\hline \text { Average for 2020: } & \text { US } \$ 1=\text { CDN } \$ 1.3350 \\\hline \text { Date when Ending Inventory Purchased: } & \text { US } \$ 1=\text { CDN } \$ 1.34 \\\hline \text { December } 31,2020: & \text { US } \$ 1=\text { CDN } \$ 1.35\\\hline\end{array}$ Sales, purchases and other expenses occurred evenly throughout the year.
Dividends declared and paid December 31, 2020.

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