ASSIGNMENT 2: Question 2 - Version 4 On January 1. 2020. Hot Lid. [HL). a Canadian company, acquired 80% of Sauce Co. [SC). a foreign company, for FC 605,160. At the acquisition date. the carrying value of SC's net assets equaled their fair value except for the equipment which had a carrying value of FC 400.000 and a fair value of FC 250,000. At the acquisition date, SC's equipment had a remaining useful life of 5 years. There was a FC 10.000 impairment of the goodwill which occured evenly throughout 2020. HL declared and paid dividends of $928,000 on December 31. 2020. SC declared and paid dividends of FC 164,000 on December 31, 2020. Selected financial statements for HL and SC are presented below. Hot Ltd. Statement of Financial Position Distribution Athabasca Univer Hot Ltd. Statement of income As of December 31, 2020 For the year ended December 31, 2020 [in $ CAD] [in $ CAD] Assets Current assets for Sales $ 16,246.180 Dividend income 405,900 Cash and cash equivalents Accounts receivable No 562.080 16,652.080 700,000 Cost of sales $ 8,256,000 Inventory 1,376,000 Other expenses* 7.124,000 15,380,000 2.638,080 Net income $ 1,272,080 Noncurrent assets Plant and equipment, net 2,752,000 *includes depreciation Investment in Sauce Co. 1.558,000 4.310,000 Total assets $ 6.948,080 Liabilities and shareholders' equity Liabilities Current liabilities $ 923,600 Accounts payable and accrued liabilities Non current liabilities Notes payable 1.860.000 2.783,600 Shareholders' equity Share capital 1,562.960 asca University Retained earnings 2.601.520 4,164.480 Total liabilities and shareholders' equity $ 6,948.080 istributionSauce Co. Ath Sauce Co. Statement of Financial Position [in FC) Not for Statement of income For the year ended December 31, 2020 [in FC) Dec. 31, 2020 Jan. 1, 2020 Sales 8.400,000 Assets Current assets Cost of sales 5,304,000 Cash and cash equivalents 360,000 164,000 Other expenses* 2.688,000 7,992,000 Accounts receivable 408,000 280,000 Net income 408,000 Inventory 484,000 364,000 .252,000 808,000 "includes depreciation Noncurrent assets Plant and equipment, net 720,000 800,000 Total assets 1.972.000 1,608,000 Sauce Co. Liabilities and shareholders' equity Statement of Changes in Equity Liabilities Retained Earnings Section Current liabilities 542,000 422,000 For the year ended December 31, 2020 Accounts payable and accrued liabilities [in FC) Non current liabilities Retained earnings, Jan. 1, 2020 146,000 Notes payable 640,000 640,000 Net income 408,000 1,182,000 1,062,000 Dividends declared (164,000) Shareholders' equity Retained earnings. Dec. 31, 2020 390,000 Share capital 400,000 400,000 Retained earnings 390,000 146,000 790.000 046,000 Univers Total liabilities and shareholders' equity .972,000 1,608,000 Selected Exchange Rates 1FC = xxx CAD basca January 1, 2020 $2.50 $275 Cha Not for Distribution December 31, 2020 Date when ending inventory was purchased C $2.70 average for 2020 $2.68 Required: Prepare the consolidated financial statements at December 31, 2020, using a. the functional currency translation (FCT) method (assuming the Canadian dollar is the functional currency) and b. the presentation currency translation [PCT) method