Aries Inc. holds a 90% interest in Sharatan Ltd., a corporation based in France. The functional currency of Sharatan (self-sustaining subsidiary) is the euro. Aries's interest in Sharatan was purchased on December 31, 2012, for €1,485,000. The carrying amount of Sharatan's identifiable net assets was €1,425,000 at the acquisition date. The entire purchase discrepancy was attributed to goodwill and no impairment of goodwill has occurred. Aries uses the full good will method to value non-controlling interest, fair valued at €165,000.
1. All of Sharatan's property, plant, and equipment was purchased on the date of its incorporation, January 1, 2010.
2. Sharatan's ending inventory was purchased on September 30, 2013.
3. Dividends of €150,000 were declared and paid by Sharatan on December 31, 2013.
4. Exchange rates are as follows:
January 1, 2010 .......... €1 = C$1.40
December 31, 2012......... €1 = C$1.46
September 30, 2013 ......... €1 = C$1.54
December 31, 2013 ......... €1 = C$1.56
Average for 2013 ......... €1 = C$1.51
(a) Calculate Sharatan's other comprehensive income in Canadian dollars.
(b) Prepare Sharatan's December 31, 2013, balance sheet in Canadian dollars.
(c) Aries's separate entity financial statements do not contain any other comprehensive income. Calculate Aries's consolidated other comprehensive income and determine how much is attributable to the equity holders of Aries.