On January 1, 20X7, Clock Inc Additional Information:
1

Essay

On January 1, 20X7, Clock Inc. of Vancouver purchased 75% of the outstanding shares of Time Limited in London, England. Time Limited's statements of financial position and statements of comprehensive income and changes in equity-retained earnings section for the year ended December 31, 20X7, are below. $\begin{array}{c} \text {Time Limited}\\ \text {Statement of Financial Position}\\ \text {December 31, 20X7}\\ \text {(in thousands of \( £^{\prime} s \) )}\\\\\begin{array}{|l|r|}\hline \text { Assets } & £ \\\hline \text { Cash } & 50 \\\hline \text { Accounts receivable } & 575 \\\hline \text { Inventories } & 825 \\\hline \text { Equipment, net } & \underline{2,670} \\\hline \text { Total assets } & \underline{4.120} \\\hline\\\hline\text { Liabilities }\\\hline \text { Accounts payable } & 465 \\\hline \text { Bonds payable } & 1,290 \\\hline \text { Common shares } & 1,200 \\\hline \text { Retained earnings } & \underline{1,165} \\\hline \text { Total liabilities and shareholders' equity } & \underline{4,120}\\\hline\end{array}\end{array}$ $\begin{array}{c} \text {Time Limited}\\ \text {Statement of Comprehensive Income}\\ \text { Year Ended December 31, \( 20 X 7 \)}\\ \text {(in thousands of \( £^{\prime} s \) )}\\\\\begin{array}{|l|r|}\hline&£\\\hline \text { Sales } & 2,170 \\\hline\\\hline \text { Cost of goods sold } & 1,203 \\\hline \text { Depreciation expense } & 267 \\\hline \text { Interest expense } & 80 \\\hline \text { Other expenses } & \underline{407} \\\hline & \underline{1,957} \\\hline \text { Comprehensive income } & \underline{213} \\\hline\end{array}\end{array}$ $\begin{array}{c}\text { Time Limited}\\\text { Statement of Changes in Equity-Partial-Retained earnings section}\\\text { Year Ended December 31, 20X7}\\\text { (in thousands of \(£^{\prime} \) s)}\\\\\begin{array}{|l|r|}\hline&£\\ \hline \text { Retained earnings-January } 1,20 \times 7 & 1,002 \\\hline \text { Comprehensive income for the year } & 213 \\\hline \text { Dividends paid } & (\underline{50}) \\\hline \text { Retained earnings-December 31, 20X7 } &\underline{ 1,165} \\\hline\end{array}\end{array}$
Additional information:
1. Time was incorporated on January 1, 20X3, when it acquired all its equipment for £4,005,000 and issued its 10-year bonds payable.
2. Time's purchases and sales occurred evenly over the year. Inventories on hand at December 31, 20X6, and December 20X7 were purchased evenly over the last quarter of 20X6 and 20X7, respectively. Inventories as at December 31, 20X7, were £650,000.
3. Dividends were paid on March 31, 20X7. There were no changes in share capital over the year.
4. Foreign exchange rates are as follows:
$\begin{array}{ll}\text {January \( 1,20X3 \)}&£ 1=C \$1.95\\\text {Average for Oct to Dec, \( 20X6 \)}&£ 1=C \$1.64\\\text {Average for \( 20X6 \)}&£ 1=C \$1.73\\\text { December } 31,20X 6 / \text { January 1, 20X7 } & £ 1=C \$ 1.67 \\\text { March 31, 20X7 } & £ 1=C \$ 1.61 \\\text { Average for Oct to Dec, } 20X7 & £ 1=C \$ 1.55 \\\text { Average for } 20X7 & £ 1=C \$ 1.57 \\\text { December 31.20X7 } & £ 1=C \$ 1.52\end{array}$ Required:
Translate Time's statement of financial position at December 31, 20X7, into Canadian dollars, assuming its functional currency is British pound sterling. Include a calculation to prove the amount of the cumulative foreign exchange translation gains and losses.