Reference no: EM133135529

Question - Zinc Corp., a Canadian company operating in Canada, paid US$150,000 to acquire machinery from a U.S. equipment manufacturer on January 1, 2018, when the exchange rate was US$1.00 = C$1.20.

The equipment was estimated to last five years with no residual value.

Zinc's year end is December 31 and it depreciates all equipment on a straight-line basis. Exchange rates were as follows:

Average exchange rate during 2018 US$1.00 = C$1.21

Closing rate at December 31, 2018 US$1.00 = C$1.25

Assume Zinc's functional currency is the Canadian dollar.

Required -

a) Prepare the journal entry to record the acquisition of the equipment on January 1, 2018.

b) Prepare all necessary adjusting entries for the year ended December 31, 2018.