Please help in solving Problem 2 given below for 60marks.

(Also please if you provide me with your solution and your solution has figures like net assets $182000 for goodwill calculation please give detailed explanation on how retained earnings part is claulated, how you reached to all figures in retained earnings part? how net assets of $182,000 is calculated and how good will for LIv ltd in FC as 1099977 is calculated?)

Problem 2 (60 marks)

On January 1, 20X8, Liv Ltd. (LL), a Canadian company, acquired 90% of Marcus Co. (MC), a foreign company for FC 623,200. At the acquisition date, the carrying value of MC's net assets equaled their fair value except for the equipment, which had a carrying value of FC 800,000 and a fair value of FC 880,000. At the acquisition date, MC's equipment had a remaining useful life of 10 years. There was an FC 4,000 impairment of the goodwill which occurred evenly throughout 20X8.

Selected financial statements for LL and MC are presented below.

Liv Ltd.

Statement of Financial Position

As of December 31, 20X8

(in $ CDN)

Assets:

Noncurrent assets:

Plant and equipment, net 2,752,000

Investment in Marcus Co. 1,371,040

4,123,040

Current assets:

Inventory 1,376,000

Accounts receivable 700,000

Cash and cash equivalents 562,080

2,638,080

Total assets 6,761,120

Shareholders' Equity:

Share capital 1,376,000

Retained earnings 2,601,520

3,977,520

Liabilities:

Noncurrent liabilities:

Notes payable 1,860,000

Current liabilities:

Accounts payable and accrued liabilities 923,600

Total liabilities 2,783,600

Total shareholders' equity and liabilities 6,761,120

Liv Ltd.

Statement of Income

For the year ended December 31, 20X8

(in $ CDN)

Sales 16,472,000

Dividend income 180,080

16,652,080

Cost of sales 8,256,000

Other expenses* 7,124,000 15,380,000

Net income 1,272,080

*includes depreciation

LL declared and paid dividends of $928,000 CDN on December 31, 20X8.

Marcus Co.

Statement of Financial Position

(in FC)

Dec. 31, Jan. 1

20X8 20X8

Assets:

Noncurrent assets:

Equipment, net 720,000 800,000

Current assets:

Inventory 484,000 364,000

Accounts receivable 408,000 280,000

Cash 360,000 164,000

1,252,000 808,000

Total assets 1,972,000 1,608,000

Shareholders' equity:

Share capital 400,000 400,000

Retained earnings 390,000 146,000

790,000 546,000

Liabilities:

Noncurrent liabilities:

Notes payable 640,000 640,000

Current liabilities:

Accounts payable 542,000 422,000

Total liabilities 1,182,000 1,062,000

Total shareholders' equity and liabilities 1,972,000 1,608,000

Marcus Co.

Statement of Income

For the year ended December 31, 20X8

(in FC)

Sales 8,400,000

Cost of sales 5,304,000

Other expenses* 2,688,000 7,992,000

408,000

*includes depreciation

Marcus Co.

Statement of Changes in Equity - Retained Earnings Section

For the year ended December 31, 20X8

(in FC)

Retained earnings, January 1, 20X8 146,000

Net income 408,000

Dividends declared (164,000)

Retained earnings, December 31, 20X8 390,000

MC declared and paid FC164,000 in dividends on December 31, 20X8.

Selected Exchange Rates

January 1, 20X8 FC1 = $2.20 CDN

December 31, 20X8 FC1 = $2.44 CDN

Date when ending inventory was purchased FC1 = $2.38 CDN

Average rate for 20X8 FC1 = $2.32 CDN

Required:

a) Prepare consolidated financial statements at December 31, 20X8 under each of the following assumptions:

i)the functional currency is $CAD, and

ii) the functional currency is the FC.

b) Assume that LL is a private company and reports under ASPE. LL uses the equity method to report its investment in MC. LL's functional currency is $CAD.Calculate LL's Investment in Marcus Co.'s account at December 31, 20X8.There is no need to prepare financial statements.