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Prepare the journal entry to record the acquisition

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    Assignment ID: FG133135529

    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.

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