On January 1, 20X6, Clock Inc Additional Information:
1

question 31

Essay

On January 1, 20X6, Clock Inc. of Vancouver purchased 75% of the outstanding shares of Time Limited in London, England. Time Limited's statements of financial position and statements of comprehensive income and changes in equity-retained earnings section for the year ended December 31, 20X7, are below. $\begin{array}{c}\text { Time Limited}\\\text { Statement of Financial Position}\\\text { December 31, 20X7}\\\text { (in thousands of \( £^{\prime} \)s )}\\\\\begin{array}{|l|r|r|}\hline \text { Assets } & 20X7 & 20X6 \\\hline \text { Cash } & 50 & 20 \\\hline \text { Accounts receivable } & 575 & 280 \\\hline \text { Inventories } & 825 & 650 \\\hline \text { Equipment, net } & 2,670 & 2,937 \\\hline \text { Total assets } & 4,120 & 3,887 \\\hline\\\hline \text { Liabilities } & & \\\hline \text { Accounts payable } & 465 & 395 \\\hline \text { Bonds payable } & 1,290 & 1,290 \\\hline \text { Common shares } & 1,200 & 1,200 \\\hline \text { Retained earnings } & \underline{1,165} & \underline{1,002} \\\hline \text { Total liabilities and shareholders' equity } & \underline{4,120} & \underline{\underline{4}, 887} \\\hline \end{array}\end{array}$
$\begin{array}{c}\text { Time Limited}\\\text { Statement of Comprehensive Income}\\ \text { Year Ended December 31, 20X7}\\\text { (in thousands of \( £^{\prime} \)s )}\\\\\begin{array}{|l|r|}\hline & £ \\\hline \text { Sales } & \underline{2,170} \\\hline \text { Cost of goods sold } & 1,203 \\\hline \text { Depreciation expense } & 267 \\\hline \text { Interest expense } & 80 \\\hline \text { Other expenses } & 407 \\\hline & \underline{1,957} \\\hline \text { Comprehensive income } & 213\\\hline\end{array}\end{array}$


$\begin{array}{c}\text {Time Limited}\\\text {Statement of Changes in Equity-Partial-Retained earnings section}\\\text {Year Ended December 31, 20X7}\\\text {(in thousands of \(£ ^{\prime} \)s )}\\\\\begin{array}{|l|r|}\hline & £ \\\hline \text { Retained earnings-January } 1,20X7 & 1,002 \\\hline \text { Comprehensive income for the year } & 213 \\\hline \text { Dividends paid } & (50) \\\hline \text { Retained earnings - December } 31,20X7 & 1,165\\\hline\end{array}\end{array}$
Additional information:
1. Time was incorporated on January 1, 20X3, when it acquired all its equipment for £4,005,000 and issued its 10-year bonds payable.
2. Time's purchases and sales occurred evenly over the year. Inventories on hand at December 31, 20X6, and December 20X7 were purchased evenly over the last quarter of 20X6 and 20X7, respectively. Inventories as at December 31, 20X7, were £650,000.
3. Dividends were paid on March 31, 20X7.
4. Foreign exchange rates are as follows:
$\begin{array}{ll}\text { January } 1,20X3 & £ 1=C \$ 1.95 \\\text { January 1, 20X6 } & £ 1=C \$ 1.85 \\\text { Average for Oct to Dec, 20X6 } & £ 1=C \$ 1.64 \\\text { Average for 20X6 } & £ 1=\mathrm{C} \$ 1.73\\ \text { December } 31,20X6 / \text { January } 1,20X7 & £ 1=C \$ 1.67 \\\text { March } 31,20X7 & £ 1=C \$ 1.61 \\\text { Average for Oct to Dec, } 20X7 & £ 1=C \$ 1.55 \\\text { Average for } 20X 7 & £ 1=C \$ 1.57 \\\text { December } 31.20X7 & £ 1=C \$ 1.52\end{array}$
Required:
Translate Time's statement of financial position at December 31, 20X7, into Canadian dollars, assuming its functional currency is Canadian dollars. Calculate the translation gain or loss arising in 20X7.

Understand how interest rates in the loanable funds market are determined by factors like risk and expected inflation.

Analyze the relationship between the demand for goods now versus in the future and its impact on real interest rates and savings.

Explain the concept of time preference and how it affects individual decisions related to consumption and saving.

Understand the factors leading to wage equality in a competitive economy.

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Definitions:

Regression Equation

An equation that represents the relationship determined by regression analysis, predicting the dependent variable based on independent variables.

Dummy Variable

A variable used in regression analysis that assumes the value 0 or 1 to indicate the absence or presence of some categorical effect.

Independent Variable

A variable that is manipulated to determine its effect on a dependent variable within an experimental study.

3-ethyl-3-methylhexane

A branched alkane with the formula C8H18, having an ethyl and a methyl group on the third carbon of the hexane chain.