Liverpool Company Operates Retail Stores in Canada and an Exporting

Essay

Liverpool Company operates retail stores in Canada and an exporting business in London that specializes in buying and selling British tweeds.The London subsidiary provided the following financial statements in pounds sterling to the Canadian parent company.


Liverpool Company was incorporated on January 1,1984,at which time an amount of property,plant,and equipment with a present (December 31,20X5)Net Book Value of £3,000,000 was purchased.Additional equipment was purchased December 31,20X4 (20% of depreciation expense relates to this new equipment).The long-term notes were issued,to replace financing provided by the parent,on January 1,20X4.
Direct exchange rates for the pound sterling (1 $C/£ )are:
The January 1,20X5 retained earnings balance of the London Branch of the Liverpool Company correctly translated to Canadian dollars was $1,783,774.The beginning inventory of £380,000 was acquired during the last quarter of 20X4 and the ending inventory was acquired during the last quarter of 20X5.Sales and purchases were made,and other expenses were incurred,evenly throughout the year.
Required:
Compute the gain or loss on holding net monetary items for the Liverpool Company for the year ending December 31,20X5.