Kennedy Company acquired all of the outstanding common stock of Hastie Company o
ID: 2489263 • Letter: K
Question
Kennedy Company acquired all of the outstanding common stock of Hastie Company of Canada for U.S. $350,000 on January 1, 2013, when the exchange rate for the Canadian dollar (CAD) was U.S. $.70. The fair value of the net assets of Hastie was equal to their book value of CAD 450,000 on the date of acquisition. Any acquisition consideration excess over fair value was attributed to an unrecorded patent with a remaining life of five years. The functional currency of Hastie is the Canadian dollar. For the year ended December 31, 2013, Hastie's trial balance net income was translated at U.S. $25,000. The average exchange rate for the Canadian dollar during 2013 was U.S. $.68, and the 2013 year-end exchange rate was U.S. $.65. Calculate the U.S. dollar amount allocated to the patent at January 1, 2013. = $35.000
Explanation / Answer
Hey Dear Student !!
Yes, your Calculation is Correct Answer is US$ 35000
Calculation is as follows:
Company Paid US$350000
To purchase Value CAD$450000
When Exchange Rate was CAD 0.70 per US$
Which means CAD$ 450000 X 0.70= US$ 315000
Patent as on JAN 01=
350000-315000= $ US$ 35000
Which will be written off in 5 Years.
Pleasure Teaching You !!
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