On December 31, Year 1, Main Corporation of Toronto paid 13.10 million Bahamian dollars (B$) for 100% of the outstanding common shares of Sub Company of Bahamas. 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	B$	10,863,000		B$	9,610,000
Inventory		1,814,000			2,403,000
Plant and equipment (net)		6,651,000			7,309,000
	B$	19,328,000		B$	19,322,000
Current monetary liabilities	B$	1,915,000		B$	2,415,000
Bonds payable, due Dec. 31, Year 6		4,810,000			4,810,000
Common shares		5,010,000			5,010,000
Retained earnings		7,593,000			7,087,000
	B$	19,328,000		B$	19,322,000

INCOME STATEMENT
For the year ended December 31, Year 2
Sales	B$	16,038,000
Inventory, Jan. 1		2,403,000
Purchases		10,854,000
Inventory, Dec. 31		(1,814,000	)
Depreciation expense		658,000
Other expenses		2,588,000
		14,689,000
Net income	B$	1,349,000

Additional Information

Exchange rates

Dec. 31, Year 1	$1	=	B$0.52
Sep. 30, Year 2	$1	=	B$0.62
Dec. 31, Year 2	$1	=	B$0.65
Average for Year 2	$1	=	B$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 B$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. (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) Exchange gain Exchange loss $

(ii) 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
	B$		Rate	Dollars
Sales	16,038,000		1/	$
Cost of goods sold	11,443,000
Depreciation expense	658,000		1/
Other expenses	2,588,000		1/
(Click to select) Exchange gain Exchange loss
	14,689,000
Net income	1,349,000			$

Retained Earnings Statement Year 2
	B$		Rate	Dollars
Bal. Jan. 1	7,087,000		1/	$
Net income	1,349,000
	8,436,000
Dividends	843,000		1/
Bal. Dec. 31	7,593,000			$

Balance Sheet December 31, Year 2
	B$		Rate	Dollars
Current monetary assets	10,863,000		1/	$
Inventory	1,814,000		1/
Plant and equipment (net)	6,651,000		1/
	19,328,000			$
Current monetary liabilities	1,915,000		1/	$
Bonds payable	4,810,000		1/
Common shares	5,010,000		1/
Retained earnings	7,593,000
	19,328,000			$

(b) Assume that Sub's functional currency is the Bahamian dollar:

(i) Calculate the Year 2 exchange gain or loss that would result from the translation of Sub'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) Exchange gain Exchange loss $

(ii) 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
	B$		Rate	Dollars
Sales	16,038,000		1/	$
Cost of goods sold	11,443,000		1/
Depreciation expense	658,000		1/
Other expenses	2,588,000		1/
	14,689,000		1/
Net income	1,349,000		1/
Other comprehensive (Click to select) income loss unrealized exchange (Click to select) gain loss
(Click to select) Comprehensive loss Comprehensive income				$

Retained Earnings Statement Year 2
	B$		Rate	Dollars
Bal. Jan. 1	7,087,000		1/	$
Net income	1,349,000		1/
	8,436,000
Dividends	843,000		1/
Bal. Dec. 31	7,593,000			$

Balance Sheet December 31, Year 2
	B$		Rate	Dollars
Current monetary assets	10,863,000		1/	$
Inventory	1,814,000		1/
Plant and equipment (net)	6,651,000		1/
	19,328,000			$
Current monetary liabilities	1,915,000		1/
Bonds payable	4,810,000		1/
Common shares	5,010,000		1/
Retained earnings	7,593,000
Accumulated foreign exchange adjustments
	19,328,000			$