Reference no: EM133139622

Question - On December 31, 2020, Poppy Corporation purchased 60% of the outstanding common shares of Seed Company. On January 1, 2017, Seed issued common shares and began operations by purchasing US$200,000 of machinery. Following are the 2021 and 2020 summarized financial statements of Seed:

	2021 (Amount in US$)	2020 (Amount in US$)
Cash	$80,000	$70,000
Accounts receivable	148,000	180,000
Inventory	260,000	220,000
Machinery, net	225,000	100,000
	$713,000	$570,000
Accounts payable	$100,000	$50,000
Bonds payable	250,000	250,000
Common shares	200,000	200,000
Retained earnings	163,000	70,000
	$713,000	$570,000
Sales	$3,000,000
Cost of goods sold	2,400,000
Gross Profit	600,000
Amortization expenses	35,000
Interest expense	20,000
Other expense	402,000
Net income	$143,000

The exchange rates were as follows:

January 1, 2017 US$ 1 = CA$ 1.80

Average, 4th quarter 2020 US$ 1 = CA$ 2.00

December 31, 2020 US$ 1 = CA$ 2.10

March 31, 2020 US$ 1 = CA$ 2.11

July 1, 2017 US$ 1 = CA$ 2.15

Average, 4th quarter 2021 US$ 1 = CA$ 2.20

Average for 2021 US$ 1 = CA$ 2.12

December 31, 2021 US$ 1 = CA$ 2.30

On July 1, 2021, Seed purchased an additional US$ 160,000 of machinery. The company amortizes all machinery over 8 years on a straight-line basis. Seed's ending inventory for 2020 and 2021 was purchased evenly over the final quarter for each year respectively. On March 31, 2021, Seed declared dividends of US$ 50,000. Sales, purchases, interest, and other expenses occurred evenly throughout the year.

Required - Prepare the translated income statement of Seed for the year ended December 31, 2021, including a detailed calculation of the foreign exchange gain or loss.