on december 31 year 1 kelly corporation of toronto paid 13 million libyan dinars ld 3387282

On December 31, Year 1, Kelly Corporation of Toronto paid 13 million Libyan dinars (LD) for 100% of the outstanding common shares of Arkenu Company of Libya. On this date, the fair values of Arkenu s identifiable assets and liabilities were equal to their carrying amounts. Arkenu s comparative balance sheets and Year 2 income statement are as follows: Additional Information • Exchange rates Dec. 31, Year 1 ….. LD1 5 $0.52 Sep. 30, Year 2 ….. LD1 5 $0.62 Dec. 31, Year 2 ….. LD1 5 $0.65 Average for Year 2 ….. LD1 5 $0.58 • Arkenu Company declared and paid dividends on September 30, Year 2. • The inventories on hand on December 31, Year 2, were purchased when the exchange rate was LD1 5 $0.63. Required: (a) Assume that Arkenu’s functional currency is the Canadian dollar: (i) Calculate the Year 2 exchange gain or loss that would result from the translation of Arkenu’s financial statements. (ii) Prepare translated financial statements for Year 2. (b) Assume that Arkenu’s functional currency is the Libyan dinar: (i) Calculate the Year 2 exchange gain or loss that would result from the translation of Arkenu’s financial statements. (ii) Prepare translated financial statements for Year 2. (iii) Calculate the amount of goodwill that would appear on the December 31, Year 2, consolidated balance sheet if there was an impairment loss of LD 50,000 during the year. (iv) Calculate the amount, description, and location of the exchange gain or loss tha

 

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