On December 31, Year 1, Kelly Corporation of Toronto paid 13.50 million Libyan dinar (LYD) for 100% of the outstanding common shares of Arkenu Company of Libya. On this date, the fair values of Arkenu's identifiable assets and liabilities were equal to their carrying amounts. Arkenu's comparative balance sheets and Year 2 income statement are as follows: BALANCE SHEET At December 31 Current monetary assets Inventory Plant and equipment (net) Year 2 LYD11, 195,882 1,870,000 6,855,000 LYD19,928,888 LYD 1,975,000 4,850,000 5,850,000 8.045,000 LYD19,920,000 Year 1 LYD 9,650, een 2,415, eee 7,345, eee LYD19,410,eee LYD 2,427, eee 4,85e,eee 5, e5e,eee 7,683, eee LYD19, 410, een Current monetary liabilities Bonds payable, due Dec. 31, Year 6 Connon shares Retained earnings INCOME STATEMENT For the yed ended December 31, Year 2 Sales LYD16, 158,888 Inventory. Jan. 1 2,415,000 Purchases 10,910,888 Inventory, Dec. 31 (1,870,089) Depreciation expense 499,000 Other expenses 1,928,888 13,873,888 Net income LYD 2,277,280 Additional Information Exchange rates Dec. 31, Year 1 Sep. 30, Year 2 Dec. 31, Year 2 Average for Year 2 LYD1 = $0.52 LYD1 = $0.62 LYD1 $0.65 LYD10.58 Arkenu 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 LYD1 = $0.63. Required: (a) Assume that Arkenu's functional currency Is the Canadian dollar: (1) Calculate the Year 2 exchange gain or loss that would result from the translation of Arkenu's financial statements. (Enter answers in whole dollars and not in millions of dollars. Input all amounts as positive value. Omit currency symbol in your response.) (Click to select) v (1) Prepare translated financial statements for Year 2 (Round the values in the "Rate" column to 2 decimal places. Exchange gain, if any, should be entered as positive value, and Exchange loss, if any, should be entered with a minus sign. Enter answers in whole dollars and not in millions of dollars. Input all other amounts as positive values. Omit currency symbol in your response.) Income Statement - Year 2 Rate Dollars $ Sales Cost of goods sold Depreciation expense Other expenses (Click to select) LYD 16,150,880 11,455,00 490,00 1,928.80 13,873, ee 2,277,000 Net Income Rate Dollars $ Retained Earnings Statement - Year 2 LYD Bal. Jan. 1 7,883,880 Net income 2,277.ee 9,360,000 Dividends 1,315,880 Bal. Dec. 31 8,845,000 $ Rate Dollars $ $ Balance Sheet - December 31, Year 2 LYD Current monetary assets 11,195, eee Inventory 1,878,eee Plant and equipment (net) 6,855, eee 19,928, eee Current monetary liabilities 1,975, eee Bonds payable 4,850, eee Connon shares 5,85e,eee Retained earnings 8,845, eee 19,928,eee $ (b) Assume that Arkenu's functional currency is the Libyan dinar. (1) Calculate the Year 2 exchange gain or loss that would result from the translation of Arkenu's financial statements. (Enter answers in whole dollars and not in millions of dollars. Input all amounts as positive value. Omit currency symbol in your response.) (Click to select) v (1) Prepare translated financial statements for Year 2 (Round the values in the "Rate" column to 2 decimal places. Loss amounts should be indicated with a minus sign. Enter answers in whole dollars and not in millions of dollars. Input all other amounts as positive values. Omit currency symbol in your response.) Income Statement - Year 2 LYD Rate Dollars Sales 16,150,eee $ Cost of goods sold 11,455, eee Depreciation expense 490,cee Other expenses 1,928,888 13,873,eee Net income 2,277.cee Other comprehensive (Click to select) - unrealized exchange (Click to selec (Click to select) V Rate Dollars $ Retained Earnings Statement - Year 2 LYD Bal. Jan. 1 7,883,880 Net income 2,277,680 9,360,000 Dividends 1,315,000 Bal. Dec. 31 8,845, ee Balance Sheet - December 31, Year 2 Rate Dollars $ Current monetary assets Inventory Plant and equipent (net) LYD 11,195,eee 1,878,eee * 6,855,eee x 19,92e,eee 1,975,000 4,850, eee * 5,650,000 8,645,000 $ Current monetary liabilities Bonds payable Common shares Retained earnings Accumulated foreign exchange adjustments M 19,92e,eee (1) Calculate the amount of goodwill that would appear on the December 31, Year 2. consolidated balance sheet If there was an Impalment loss of LYD50,000 during the year. (Enter answers in whole dollars and not in millions of dollars. Input all other amounts as positive values. Omit currency symbol in your response.) Goodwill - December 31, Year 2 $ (iv) Calculate the amount of the exchange gain or loss that would appear in Kelly's Year 2 consolidated financial statements. (Enter answers in whole dollars and not in millions of dollars. Input all amounts as positive value. Omit currency symbol in your response.) Click to select) V $ (c) Which functional currency would Arkenu prefer to use if it wants to show the following? Click to select) (c) Which functional currency would Arkenu prefer to use if it wants to show the following? (1) The strongest solvency position for the company O Functional currency Is Canadian dollar. O Functional currency Is Libyan dinar and accumulated foreign exchange adjustments (AFEA) are included in equity. O Functional currency is Libyan dinar and AFEA are excluded from equity. (ii) The best return on shareholders' equity O Functional currency is Canadian dollar. O Functional currency Is Libyan dinar and other comprehensive Income (OC) Is Included in Income and AFEA Included in equity. O Functional currency is Libyan dinar and OCI is excluded from Income and AFEA are excluded from equity