On December $31,$ Year $1,$ Precision Manufacturing Inc. $($PMI$)$ of Edmonton purchased $100\%$ of the outstanding ordinary shares of Sandora Corp. of Flint, Michigan.

Sandora$$s comparative statement of financial position and Year $2$ income statement are as follows:

STATEMENT OF FINANCIAL POSITION

At December $31$

Year $2$ Year $1$

Plant and equipment $($net$)$ US$ $6,790,000$ US$ $7,490,000$

Inventory $5,890,0006,490,000$

Accounts receivable $6,290,0004,890,000$

Cash $970,0001,090,000$

US$ $19,940,000$ US$ $19,960,000$

Ordinary shares US$ $5,190,000$ US$ $5,190,000$

Retained earnings $7,670,0007,190,000$

Bonds payable$$due Dec. $31,$ Year $64,990,0004,990,000$

Current liabilities $2,090,0002,590,000$

US$ $19,940,000$ US$ $19,960,000$

INCOME STATEMENT

For the year ended December $31,$ Year $2$

Sales US$ $49,000,000$

Cost of purchases $38,220,000$

Change in inventory $600,000$

Depreciation expense $700,000$

Other expenses $6,270,000$

$45,790,000$

Profit US$ $3,210,000$

Additional Information

Exchange rates

Dec. $31,$ Year $1$ US$$1=$ C$$1\mathrm{.}10$

Sep. $30,$ Year $2$ US$$1=$ C$$1\mathrm{.}07$

Dec. $31,$ Year $2$ US$$1=$ C$$1\mathrm{.}05$

Average for Year $2$ US$$1=$ C$$1\mathrm{.}08$

Sandora declared and paid dividends on September $30,$ Year $2.$

The inventories on hand on December $31,$ Year $2,$ were purchased when the exchange rate was US$$1=$ C$$1\mathrm{.}06.$

Assume that Sandora's functional currency is the U$.$S$.$ dollar:

$($i$)$ Calculate the Year $2$ exchange gain $($loss$)$ that would result from the translation of Sandora's financial statements.

$($ii$)$ Translate the Year $2$ financial statements into Canadian dollars.

$($b$)$ Assume that Sandora's functional currency is the U$.$S$.$ dollar:

$($i$)$ Calculate the Year $2$ exchange gain $($loss$)$ that would result from the translation of Sandora's financial statements and would be reported in other comprehensive income.

$($ii$)$ Translate the Year $2$ financial statements into Canadian dollars.

Please explain in detail, and do not forget about part $($b$)$