EXIB 11.3 Ganado Europe's Translation Loss after Depreciation of the Euro: Current Rate Method December 31, 2010 January 2, 2011 Exchange Rate Translated Exchange Rate Translated Assets In Euros () (US$/euro) Accounts (USS), (US$/euro) Accounts (US$) Cash 1,600,000 1.2000 $ 1,920,000 1.0000 $ 1,600,000 Accounts receivable 3,200,000 1.2000 3,840,000 1.0000 3,200,000 Inventory 2,400,000 1.2000 2,880,000 1.0000 2,400,000 Net plant & equipment 4,800,000 1.2000 5.760,000 1.0000 4,800,000 Total 12,000,000 $14,400,000 $12,000,000 Liabilities & Net Worth Accounts payable 800,000 1.2000 $ 960,000 1.0000 $800,000 Short-term bank debt 1,600,000 1.2000 1,920,000 1.0000 1,600,000 Long-term debt 1,600,000 1.2000 1.920,000 1.0000 1,600,000 Common stock 1,800,000 1.2760 2,296,800 1.2760 2,296,800 Retained earnings 6,200,000 1.2000 (a) 7,440,000 1.2000 (6) 7,440,000 Translation adjustment $ (136,800) (CTA) $(1.736,800) Total 12,000,000 $14,400,000 tel Dolar retained earnings before depreciation are the cumulative sum of addition to retained comings of all prior years, translated at exchange rates in $12,000,000 Bach year. Translated into dotars at the same rate as before depreciation of the euro. 1413 Exhibit 11.6: Ganado Europe's Translation Loss After Depreciation of the Euro: Temporal Method 1.2000 December 31, 2010 January 2, 2011 Exchange Rate Translated Exchange Rate Translated (US$/ouro) Accounts (USS) In Euros (9) (USS/euro) Accounts (USS) Assets $ 1,920,000 1,600,000 V 1.0000 $ 1,600,000 Cash 3,200,000 V Accounts receivable 1.2000 1.0000 3,840.000 3,200,000 2,400,000 Inventory 1.2180 2,923,200 1.2180 2,923,200 Net plant and equipment 4,800,000 1.2760 6,124,800 1.2760 6,124,800 Total 12,000,000 $14,808,000 $13,848,000 Liabilities and Net Worth Accounts payable 800,000 1.2000 $ 960,000 1.0000 $ 800,000 Short-term bank debt 1,600,000 1.2000 1,920,000 1.0000 1,600,000 Long-term debt 1,600,000 1.2000 1,920,000 1.0000 1,600,000 Common stock 1,800,000 1.2760 2,296,800 1.2760 2.296,800 Retained earnings 6,200,000 1.2437) 7.711.200 1.2437(b) 7,711,200 Translation gain (loss) $ (160,000) Total 12,000,000 $14,808,000 $13,848,000 (A) Dollar retained earnings before depreciation are the cumulative sum of addition to retained earnings of all prior years, translated at exchange rates in each year by Translated into dollars at the same rate as before depreciation of the euro (c) Under the temporal method, the translation loss of $160,000 would be closed into retained earnings through the income statement rather than left as a separate line item as shown here. Ending retained earnings would actually be 57.711.200 - $160,000 = 57.551.200