On December 31, 2019, Hilman Enterprises of Montreal Paid $12,000,000

Essay

On December 31, 2019, Hilman Enterprises of Montreal paid $12,000,000 for 100% of the outstanding shares of Wilsen Corp of the United States. Wilsen's fair values approximated its book values on that date.
Wilsen's comparative balance sheets for 2019 and 2020 are shown below:
Balance Sheet as at
December 31 (in U.S. Dollars)
$\begin{array}{|l|r|r|}\hline & \mathbf{2 0 2 0} & \mathbf{2 0 1 9} \\\hline \text { Current Monetary Assets } & \$ 8,000,000 & \$ 7,500,000 \\\hline \text { Inventory } & \$ 2,000,000 & \$ 3,000,000 \\\hline \text { Plant and Equipment (Net) } & \$ 1,500,000 & \$ 1,800,000 \\\hline \text { Total Assets } & \$ 11,500,000 & \$ 12,300,000 \\\hline \text { Current Liabilities } & \$ 1,100,000 & \$ 2,300,000 \\\hline \text { Bonds Payable (due Dec 31,2026) } & \$ 5,000,000 & \$ 5,000,000 \\\hline \text { Common Shares } & \$ 4,000,000 & \$ 4,000,000 \\\hline \text { Retained Earnings } & \$ 1,400,000 & \$ 1,000,000 \\\hline \text { Total Liabilities and Equity } & \$ 11,500,000 & \$ 12,300,000\\\hline\end{array}$ Income Statement for
the Year ended
December 31, 2020
$\begin{array}{|l|r|}\hline \text { Sales } & \$ 5,200,000 \\\hline \text { Inventory, January } 1,2020 & \$ 3,000,000 \\\hline \text { Purchases } & \$ 3,000,000 \\\hline \text { Inventory, December } 31,2020 & (\$ 2,000,000) \\\hline \text { Depreciation Expense } & \$ 300,000 \\\hline \text { Other Expenses } & \$ 400,000 \\\hline & \$ 4,700,000 \\\hline \text { Net Income } & \$ 500,000 \\\hline\end{array}$ Other Information:
Exchange Rates:
$$\begin{array} { | l | r | } \hline \text { December } 31,2019 : & \text { US } \$ 1 = \text { CDN } \$ 1.1850 \\\hline \text { September 30, 2020: } & \text { US } \$ 1 = \text { CDN } \$ 1.1975 \\\hline \text { December } 31,2020 : & \text { US } \$ 1 = \operatorname { CDN } \$ 1.20 \\\hline \text { Average for } 2020 : & \text { US } \$ 1 = \operatorname { CDN } \$ 1.19 \\\hline\end{array}$$ Wilsen paid US$100,000 in dividends on September 30, 2020. The inventories on hand at the end of 2020 were purchased when the exchange rate was US$1 = CDN$1.195.
Sales, purchases and other expenses occurred evenly throughout the year.
Translate Wilsen's December 31, 2020 Statement of Retained Earnings if Wilsen's functional currency was the U.S. dollar (i.e., the functional currency of the foreign subsidiary is different than the parent's functional currency).