On December 31, Year 1, A Canadian Company paid 13.30 million Libyan Dinar (LD) ( (LD)) for 100% of the outstanding common shares of Sub Company of Tripoli. On this date, the fair values of Subs identifiable assets and liabilities were equal to their carrying amounts. Subs comparative balance sheets and Year 2 income statement are as follows:

BALANCE SHEET
At December 31
		Year 2			Year 1
Current monetary assets	(LD)	11,029,000		(LD)	9,630,000
Inventory		1,842,000			2,409,000
Plant and equipment (net)		6,753,000			7,327,000
	(LD)	19,624,000		(LD)	19,366,000
Currentmonetary liabilities	(LD)	1,945,000		(LD)	2,421,000
Bonds payable, due Dec. 31, Year 6		4,830,000			4,830,000
Common shares		5,030,000			5,030,000
Retained earnings		7,819,000			7,085,000
	(LD)	19,624,000		(LD)	19,366,000

INCOME STATEMENT
For the year ended December 31, Year 2
Sales	(LD)	16,094,000
Inventory, Jan. 1		2,409,000
Purchases		10,882,000
Inventory, Dec. 31		(1,842,000	)
Depreciation expense		574,000
Other expenses		2,258,000
		14,281,000
Net income	(LD)	1,813,000

Additional Information

• Exchange rates

Dec. 31, Year 1	$1	=	(LD)0.52
Sep. 30, Year 2	$1	=	(LD)0.62
Dec. 31, Year 2	$1	=	(LD)0.65
Average for Year 2	$1	=	(LD)0.58

• Sub Company 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 (LD)1 = $0.63.

Required:

(a)Assume that Sub's functional currency is the Canadian dollar:

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

(ii)Prepare translated financial statements for Year 2.

(b)Assume that Sub's functional currency is the Libyan Dinar., Calculate the Year 2 exchange gain or loss that would result from the translation of Sub's financial statements.