On January $1,2023,$ Larmer Corp. $($a Canadian company$)$ purchased $\backslash (80\backslash \%\backslash )$ of Martin Inc, an American company, for US $\backslash (\backslash$$ $50,000\backslash ).$

Martin's book values approximated its fair values on that date except for plant and equipment, which had a fair value of US $\backslash (\backslash$$ $30,000\backslash )$ with a remaining life expectancy of $5$ years. A goodwill impairment loss of US $\backslash (\backslash$$ $1,500\backslash )$ occurred during $2023.$

Martin's January $1,2023$ balance sheet is shown below $($in U$.$S$.$ dollars$)$: The financial statements of Larmer $($in Canadian dollars$)$ and Martin $($in U$.$S$.$ dollars$)$ are shown below:

Balance Sheets

At December $31,2023$

$\backslash$begin$\{$tabular$\}\{|$l$|$l$|$l$|\}$

$\backslash$hline & Larmer$($Canadian dollars$)$ & Martin$($U$.$S$.$ dollars$)\backslash \backslash$

$\backslash$hline Current monetary assets & $\backslash$$$42,050$ & $\backslash$$$65,000\backslash \backslash$

$\backslash$hline Inventory & $60,000$ & $50,000\backslash \backslash$

$\backslash$hline Plant and equipment & $23,500$ & $20,000\backslash \backslash$

$\backslash$hline Investment in Martin $($at cost$)$ & $66,250$ & $-------\backslash \backslash$

$\backslash$hline Total assets & $\backslash$$$191,800$ & $\backslash$$$135,000\backslash \backslash$

$\backslash$hline Current liabilities & $\backslash$$$50,000$ & $\backslash$$$48,000\backslash \backslash$

$\backslash$hline Bonds payable $($maturity: January $1,2029)$ & $35,000$ & $20,000\backslash \backslash$

$\backslash$hline Common shares & $60,000$ & $30,000\backslash \backslash$

$\backslash$hline Retained earnings & $30,000$ & $20,000\backslash \backslash$

$\backslash$hline Net Income & $28,800$ & $27,000\backslash \backslash$

$\backslash$hline Dividends & $\backslash (\backslash$underline$\{-12,000\}\backslash )$ & $\backslash (\backslash$underline$\{-10,000\}\backslash )\backslash \backslash$

$\backslash$hline Liabilities and Equity & $\backslash$$$191,800$ & $\backslash$$$135,000\backslash \backslash$

$\backslash$hline

$\backslash$end$\{$tabular$\}$ Income Statements

For the year ended December $31,2023$

$\backslash$begin$\{$tabular$\}\{|$l$|$l$|$l$|\}$

$\backslash$hline & Larmer$($Canadian dollars$)$ & Martin$($U$.$S$.$ dollars$)\backslash \backslash$

$\backslash$hline Sales & $\backslash$$$80,000$ & $\backslash$$$50,000\backslash \backslash$

$\backslash$hline Dividend income & $10,800$ & $\backslash \backslash$

$\backslash$hline Cost of goods sold & $-40,000$ & $-15,000\backslash \backslash$

$\backslash$hline Depreciation & $-10,000$ & $-5,000\backslash \backslash$

$\backslash$hline Other expenses & $\backslash (\backslash$underline$\{-12,000\}\backslash )$ & $\backslash (\backslash$underline$\{-3,000\}\backslash )\backslash \backslash$

$\backslash$hline Net income & $\backslash$$$28,800$ & $\backslash$$$27,000\backslash \backslash$

$\backslash$hline

$\backslash$end$\{$tabular$\}$

Other information:

$-$ Sales, purchases, and other expenses occurred evenly throughout the year.

$-$ Dividends declared and paid December $31,2023.$

$-$ Larmer uses the cost method to account for its investment in Martin

The following exchange rates were in effect during $2023$:

$\backslash$begin$\{$tabular$\}\{|$c$|$c$|\}$

$\backslash$hline January $1,2023$: & US $\backslash (\backslash$$ $1=\backslash$mathrm$\{$CDN$\}\backslash$$ $1\mathrm{.}3250\backslash )\backslash \backslash$

$\backslash$hline Average for $2023$: & US $\backslash (\backslash$$ $1=\backslash$mathrm$\{$CDN$\}\backslash$$ $1\mathrm{.}3350\backslash )\backslash \backslash$

$\backslash$hline Date when ending inventory was purchased: & US $\backslash (\backslash$$ $1=\backslash$mathrm$\{$CDN$\}\backslash$$ $1\mathrm{.}34\backslash )\backslash \backslash$

$\backslash$hline December $31,2023$: & US $\backslash (\backslash$$ $1=\backslash$mathrm$\{$CDN$\}\backslash$$ $1\mathrm{.}35\backslash )\backslash \backslash$

$\backslash$hline

$\backslash$end$\{$tabular$\}$ Required:

a$.$ Compute Martin's exchange gain or loss for $2023$ assuming Martin's functional currency was the Canadian dollar $($i$.$e$.,$ the same functional currency as the parent$).(8$ marks$)$

b$.$ Translate Martin's $2023$ income statement into Canadian dollars assuming Martin's functional currency was the Canadian dollar $($i$.$e$.,$ the same functional currency as the parent$).(10$ marks$)$

c$.$ Translate Martin's December $31,2023$ balance sheet into Canadian dollars assuming Martin's functional currency was the Canadian dollar $($i$.$e$.,$ the same functional currency as the parent$).(10$ marks$)$

d$.$ Prepare Larmer's December $31,2023$ consolidated balance sheet assuming Martin's functional currency was the Canadian dollar $($i$.$e$.,$ the same functional currency as the parent$).(21$ marks$)$

e$.$ Compute Martin's exchange gain or loss for $2023$ assuming Martin's functional currency is the U$.$S$.$ dollar $($i$.$e$.,$ the functional currency of the foreign subsidiary is different than the parent's functional currency$).(6$ marks$)$

f$.$ Translate Martin's $2020$ income statement into Canadian dollars if Martin's functional currency is the U$.$S$.$ dollar $($i$.$e$.,$ the functional currency of the foreign subsidiary is different than the parent's functional currency$).(5$ marks$)$