Reference no: EM132776215
On January 1, Year 2, Prime Corp. acquired 100% of the common shares of Swissco SA, a company operating in Switzerland, for 90,000 Swiss francs ("CHF"). On the acquisition date, the carrying value of Swissco's shareholders' equity was CHF65,000, comprised of common shares of CHF50,000 and retained earnings of CHF15,000. The entire acquisition differential was allocated to equipment with a remaining useful life of 5 years. Prime Corp is a Canadian company operating in Burnaby, BC. Its functional currency is the Canadian dollar ("CAD").
Swissco's statements of financial position for December 31, Years 1 and 2, and statement of net income and retained earnings for the year ended December 31, Year 2, are as follows:
Relevant exchange rates during Year 2 were as follows:
January 1 CHF1.00 = CAD1.150
Date land was purchased CHF1.00 = CAD1.160
Date ending inventory was purchased CHF1.00 = CAD1.175
Date dividends declared and paid CHF1.00 = CAD1.170
December 31 CHF1.00 = CAD1.185
Average for Year 2 CHF1.00 = CAD1.165
Assume that sales, inventory purchases, interest expense and other expenses occurred evenly throughout the year.
Required:
Problem (a) Translate Swissco's Year 2 financial statements assuming that Swissco's functional currency is the Canadian dollar.