seqea company was incorporated on january 2 20×4 and commenced active operations imm 4374068

SEQEA Company was incorporated on January 2, 20X4, and commenced active operations immediately. Common shares were issued on the date of incorporation and no new common shares have been issued since then. On December 31, 20X12, RST Company purchased 70% of the outstanding common shares of SEQEA for 1,500,000 Swedish kronor (SEK). SEQEA’s main operations are located in Sweden. It manufactures and sells fine Swedish furniture. Approximately 40% of its sales are to RST, 40% to companies throughout Western Europe, and 20% to China. To satisfy the extra demand from RST, SEQEA built a new manufacturing plant in Sweden in 20X14. The plant was financed with retained earnings and a loan from a Swedish bank. Most of the material and labour for the manufacturing operation are obtained from local sources in Sweden.For the year ended December 31, 20X15, the SCI for SEQEA was as follows:Sale other revenue………………………………………………………………………………. SEK 8,500,000Cost of goods sold………………………………………………………………………………. 4,000,000Amortization expense…………………………………………………………………………… 150,000Other expenses……………………………………………………………………………………… 3,850,000 Net Income…………………………………………………………………………………………… SEK 500,000The comparative SFP in condensed form for SEQEA was as follows:Additional Information1. The ending inventory for 20X14 and 20X15 was manufactured evenly throughout the last month of each year. The additions to inventory, sales and other revenue, and other expenses occurred evenly throughout the year.2. The property, plant, and equipment on hand at the end of 20X12 had been purchased by SEQEA on January 10, 20X9. The new manufacturing plant was completed on December 31, 20X14 for a total cost of SEK 100,000. The amortization on the new plant in 20X15 was SEK 5,000. There have been no other purchases or sales of capital assets since 20X12.3. The non- monetary liabilities represent obligations for SEQEA to provide services over the next 12 months. The obligations arose evenly throughout the last 6 months of 20X15.4. Dividends were declared and paid on December 31, 20X15.5. SEQEA’s financial statements must be translated to Canadian dollars so that they can be consolidated with the financial statements of RST. Foreign exchange rates were as follows:January 2, 20X4………………………………………………………………………………… SEK 1 = C$ 0.30 January 10, 20X9………………………………………………………………………………. SEK 1 = C$ 0.25 December 31, 20X12…………………………………………………………………………. SEK 1 = C$ 0.24Average for 20X14……………………………………………………………………………. SEK 1 = C$ 0.23Average for December 20X14……………………………………………………………. SEK 1 = C$ 0.21December 31, 20X14………………………………………………………………………… SEK 1 = C$ 0.20Average for 20X15………………………………………………………………………….. SEK 1 = C$ 0.18Average for July to December 20X15………………………………………………… SEK 1 = C$ 0.17Average for December 20X15…………………………………………………………… SEK 1 = C$ 0.16December 31, 20X15………………………………………………………………………… SEK 1 = C$ 0.15Required1. The CFO is wondering whether SEQEA’s financial statements should be translated into Canadian dollars using the current- rate or the temporal method. What is your recommendation? Why?2. Ignore your answer to part 1 and determine the Canadian dollar amount for the follow-ing items on the financial statements for the year ended December 31, 20X15, under the current- rate method:a) Other expensesb) Inventory at end of yearc) Common sharesd) The translation gain or loss for 20X153. Ignore your answers to parts 1 and 2 and determine the Canadian dollar amount for the following items on the financial statements for the year ended December 31, 20X15, under the temporal method:a) Cost of goods soldb) Amortization expensec) Monetary assetsd) Non- monetary liabilitiese) The translation gain or loss for20X15.
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SEQEA Company was incorporated on January 2 20X4 and commenced

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