1. Gina Corporation is in the process of consolidating the subsidiaries that are in Chile. As the two companies have different functional currencies, the balances of the accounts of the Chilean company must be converted to dollars. Corporation A purchased inventory from Chilean subsidiaries in the current year. The merchandise is acquired for 720,000 Chilean pesos when the exchange rate was one dollar for 90 Chilean pesos. At the end of the year, the exchange rate was one dollar for $110 Chilean pesos. What should you recognize in the financial statement as a result of this conversion?

1. A conversion gain of $1,455 that is reported within net income
2. A conversion loss of $1,455 that is reported under comprehensive other income
3. A conversion loss of $1,455 that is reported within net income
4. A conversion gain of $1,455 that is reported under comprehensive other income