Question

On January 1, 2013, Polaris acquired all the share capital of Gordon for U.S. $249,800. Polaris has a functional currency of the Canadian dollar and Gordon has the U.S. dollar as the functional currency. At this date, Gordon's equity comprised:
Share capital—100,000 shares .... U.S. $100,000
Retained earnings ......... U.S. $86,000
All identifiable assets and liabilities of Gordon were recorded at fair value as at January 1, 2013, except for the following:
The equipment is expected to have a further 10-year life. All of the inventory was sold by December 31, 2013. The tax rate is 40%. The following exchange rates exist:
Date ........ U.S. $1
January 1, 2013 .... C$0.989
Average 2013 .... C$0.925
December 31, 2013 .. C$01.01
Required
Prepare the acquisition analysis and calculate the fair value adjustments for the preparation of consolidated financial statements in Canadian dollars for Polaris and its subsidiary Gordon as at:
(a) January 1, 2013.
(b) December 31, 2013.


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  • CreatedJune 09, 2015
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