On January 1, 2016, Pan acquired all the stock of Sim of Belgium for $1,200,000, when Sim had 20,000,000 euros (Eu) capital stock and 15,000,000 euros (Eu) retained earnings. Sim's net assets were fairly valued on this date and any cost/book value differential is due to a patent with a 10-year amortization period. Sim's functional currency is the euro. The exchange rates for euros for 2016 were as follows:
January 1, 2016 ...................... $.02
Average for 2016 .................... $.022
December 31, 2016 ................. $.025
REQUIRED
1. Calculate the patent value from the business combination on January 1, 2016.
2. Determine patent amortization in U.S. dollars for 2016.
3. Prepare a journal entry on Pan's books to record the patent amortization for 2016.