Question - Prints Galore Ltd., a Canadian company, acquired 100% of Sculptures Ltd. for FC 300,000 on January 1, 2014. Prints Galore's functional currency is the Canadian dollar and Sculpture's functional currency is the FC. Selected exchange rates are presented below: January 1, 2014 FC1 = $1.6993 CAD December 31, 2015 FC1 = $1.7182 CAD December 31, 2016 FC1 = $1.7233 CAD Assume that the average rate for 2014, 2015, and 2016 is FC 1 = $1.7201 CAD.

Required:

a) At the time of acquisition, the fair value of Sculpture's net assets was FC 200,000. There has been no impairment of goodwill.

i) Calculate the amount of goodwill that should be presented on Prints Galore's December 31, 2016 consolidated statement of financial position.

ii) Calculate the amount of exchange gain/loss, if any, that should be reported on Prints Galore's 2016 consolidated statement of income under other comprehensive income.

b) Assume that at the time of acquisition, the fair value of Sculpture's net assets is FC 300,000. All of the net assets equaled their carrying value with the exception of some machinery which exceeded its carrying value by FC 100,000. The machinery has a remaining useful life of 5 years. Both Prints and Sculpture use straight-line amortization.

i) At the end of 2016, what amount, if any, of the acquisition differential should be added to the net book value of the equipment?

ii) Calculate the amortization expense, if any, related to the acquisition differential that should be included in Prints' consolidated statement of comprehensive income for 2016.

iii) Calculate the ending balance of the cumulative exchange gain, cumulative OCI.