Problem 2 - Garfield's Lasagna Factory Expansion By the year 2024, Garfield's lasagnas have become popular in many countries outside of Canada. Due to the high demand for lasagna in Switzerland and costly shipping methods, Garfield Inc. purchased a subsidiary in Switzerland. On January 1, 2024, Garfield Inc. acquired 40% of Odie Ltd.'s common shares for 850,000 CHF. The following are the financial statements of Odie Ltd, as at December 31, 2024: Balance Sheet Swiss Francs 180,000 CHF 175,000 CHF 350,000 CHF 425,000 CHF Cash Accounts receivable Inventories - at cost Land Buildings Accumulated depreciation Equipment Accumulated depreciation 1,400,000 CHF 505,000 CHF 495,000 CHF 195,000 CHF 895,000 CHF 300,000 CHF 2,325,000 CHF Accounts payable Miscellaneous payables Bonds payable Common shares Retained earnings 230,800 CHF 144,500 CHF 500,000 CHF 850,000 CHF 599,700 CHF 2,325,000 CHF Retained Earnings Statement Balance, January 1 Net income 450,000 CHF 549,700 CHF 999,700 CHF 400,000 CHF 599,700 CHF Dividends Balance, December 31 Income Statement Sales Cost of sales Other expenses Total expenses Net income 3,250,000 CHF 1,850,300 CHF 850,000 CHF 2,700,300 CHF 549,700 CHF Exchange rates during the year were: January 1, 2024 $1CDN = 4.25 CHF December 31, 2024 $1CDN = 4.75 CHF Average for 2024 $1CDN = 3.95 CHF The land and buildings were purchased in 2020 when the exchange rate was 3.8 CHF. During 2024, equipment costing 150,000 CHF was purchased for cash. Depreciation totalling 25,000 CHF was recorded on this equipment. The exchange rate on the date of the equipment purchase was 5.05 CHF. The remaining equipment was purchased in 2021 when the exchange rate was 3.88 CHF. Depreciation on the buildings of 75,000 CHF and depreciation on the equipment of 65,000 CHF are included in other expenses on the income statement. The December 31, 2024, inventory was acquired during the last quarter of the year, when the average exchange rate was 4.95 CHF. On January 1, 2024, inventory was 500,000 CHF and was acquired when the average exchange rate was 5.25 CHF. - The bonds payable were issued on January 1, 2019 when the exchange rate was 3.85 CHF and will mature on December 31, 2029. Other operating expenses were incurred equally throughout the year. Dividends were declared and paid on December 31, 2024. On January 1, 2024, liabilities were greater than monetary assets by 810,000 CHF. The common shares were issued on January 1, 2018, when the exchange rate was 3.5 CHF. Required: A) Assume that Odie Ltd.'s functional currency is the Canadian dollar. Translate the financial statements into Canadian dollars using the FCT method. B) Assume that Odie Ltd.'s functional currency is the Swiss Franc. Translate the financial statements into Canadian dollars using the PCT method. C) Name two accounts that exist in your financial statements under the PCT method that do not exist under the FCT method. Problem 2 - Garfield's Lasagna Factory Expansion By the year 2024, Garfield's lasagnas have become popular in many countries outside of Canada. Due to the high demand for lasagna in Switzerland and costly shipping methods, Garfield Inc. purchased a subsidiary in Switzerland. On January 1, 2024, Garfield Inc. acquired 40% of Odie Ltd.'s common shares for 850,000 CHF. The following are the financial statements of Odie Ltd, as at December 31, 2024: Balance Sheet Swiss Francs 180,000 CHF 175,000 CHF 350,000 CHF 425,000 CHF Cash Accounts receivable Inventories - at cost Land Buildings Accumulated depreciation Equipment Accumulated depreciation 1,400,000 CHF 505,000 CHF 495,000 CHF 195,000 CHF 895,000 CHF 300,000 CHF 2,325,000 CHF Accounts payable Miscellaneous payables Bonds payable Common shares Retained earnings 230,800 CHF 144,500 CHF 500,000 CHF 850,000 CHF 599,700 CHF 2,325,000 CHF Retained Earnings Statement Balance, January 1 Net income 450,000 CHF 549,700 CHF 999,700 CHF 400,000 CHF 599,700 CHF Dividends Balance, December 31 Income Statement Sales Cost of sales Other expenses Total expenses Net income 3,250,000 CHF 1,850,300 CHF 850,000 CHF 2,700,300 CHF 549,700 CHF Exchange rates during the year were: January 1, 2024 $1CDN = 4.25 CHF December 31, 2024 $1CDN = 4.75 CHF Average for 2024 $1CDN = 3.95 CHF The land and buildings were purchased in 2020 when the exchange rate was 3.8 CHF. During 2024, equipment costing 150,000 CHF was purchased for cash. Depreciation totalling 25,000 CHF was recorded on this equipment. The exchange rate on the date of the equipment purchase was 5.05 CHF. The remaining equipment was purchased in 2021 when the exchange rate was 3.88 CHF. Depreciation on the buildings of 75,000 CHF and depreciation on the equipment of 65,000 CHF are included in other expenses on the income statement. The December 31, 2024, inventory was acquired during the last quarter of the year, when the average exchange rate was 4.95 CHF. On January 1, 2024, inventory was 500,000 CHF and was acquired when the average exchange rate was 5.25 CHF. - The bonds payable were issued on January 1, 2019 when the exchange rate was 3.85 CHF and will mature on December 31, 2029. Other operating expenses were incurred equally throughout the year. Dividends were declared and paid on December 31, 2024. On January 1, 2024, liabilities were greater than monetary assets by 810,000 CHF. The common shares were issued on January 1, 2018, when the exchange rate was 3.5 CHF. Required: A) Assume that Odie Ltd.'s functional currency is the Canadian dollar. Translate the financial statements into Canadian dollars using the FCT method. B) Assume that Odie Ltd.'s functional currency is the Swiss Franc. Translate the financial statements into Canadian dollars using the PCT method. C) Name two accounts that exist in your financial statements under the PCT method that do not exist under the FCT method