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 Plant and equipment (net) US$ 6,740,000 Inventory 5,840,000 Accounts receivable 6,240,000 Cash 920,000 US$19,740,000 Ordinary shares US$ 5,140,000 Retained earnings 7,620,000 Bonds payable-due Dec. 31, Year 6 4,940,000 Current liabilities 2,040,000 US$19,740,000 Year 1 US$ 7,440,000 6,440,000 4,840,000 1,040,000 US$19,760,000 US$ 5,140,000 7,140,000 4,940,000 2,540,000 US$19,760,000 INCOME STATEMENT For the year ended December 31, Year 2 Sales US$44,000,000 Cost of purchases 34,320,000 Change in inventory 600,000 Depreciation expense 700,000 Other expenses 5,620,000 41, 240,000 Profit US$ 2,760,000 Additional Information Exchange rates Dec. 31, Year 1 Sep. 30, Year 2 Dec. 31, Year 2 Average for Year 2 US$1 = C$1.10 US$1 = C$1.07 US$1 = C$1.05 US$1 = C$1.08 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$1.06. Required: (a) Assume that Sandora's functional currency is the Canadian dollar: (1) Calculate the Year 2 exchange gain (loss) that would result from the translation of Sandora's financial statements. (Input all amounts as positive value. Omit currency symbol In your response.) Exchange gain C$ (11) Translate the Year 2 financial statements Into Canadian dollars. (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. Input all other amounts as positive values. Omit currency symbol in your response.) Income Statement-Year 2 Rate C$ Sales Cost of purchases Change in inventory Depreciation expense Other expenses (Click to select) US$ 44,000,000 x 34,320,000 x x 600,000 700,000 x 5,620,000 x ID 41, 240,000 2,760,000 Click to select) C$ Retained Earnings Statement-Year 2 US$ Rate Bal. Jan 1 7,140,000 x Profit 2,760,000 9,900,000 Dividends 2,280,000 Bal. Dec 31 7,620,000 Statement of Financial Position December 31, Year 2 US$ Rate Plant and equipment (net) 6,740,000 x Inventory 5,840,000 x Accounts receivable 6,240,000 x Cash 920,000 19,740,000 Ordinary shares 5,140,000 x Retained earnings 7,620,000 Bonds payable 4,940,000 x Current liabilities 2,040,000 x 19,740,000 (b) Assume that Sandora's functional currency is the U.S. dollar: (1) 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. (Input all amounts as positive value. Omit currency symbol in your response.) Exchange loss C$ (11) Translate the Year 2 financial statements into Canadian dollars. (Round the values in the "Rate" column to 2 decimal places. Loss amounts should be indicated with a minus sign. Input all other amounts as positive values. Omit currency symbol in your response.) Income Statement - Year 2 Rate C$ Sales Cost of purchases Change in inventory Depreciation expense Other expenses Total Profit Other comprehensive loss loss Comprehensive income US$ 44,000,000 34,320,000 600,000 700,000 5,620,000 41, 240,000 2,760,000 unrealized exchange Year 2 Rate C$ Retained Earnings Statement US$ Bal. Jan 1 7,140,000 x Profit 2,760,000 x 9,900,000 Dividends 2,280,000 Bal. Dec 31 7,620,000 Rate CS Statement of Financial Position - December 31, Year 2 US$ Plant and equipment (net) 6,740,000 x Inventory 5,840,000 * Accounts receivable 6,240,000 x Cash 920,000 x 19,740,000 Ordinary shares 5,140,000 x Retained earnings 7,620,000 Accumulated foreign exchange adjustments Bonds payable 4,940,000 x Current liabilities 2,040,000 x 19,740,000 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 Plant and equipment (net) US$ 6,740,000 Inventory 5,840,000 Accounts receivable 6,240,000 Cash 920,000 US$19,740,000 Ordinary shares US$ 5,140,000 Retained earnings 7,620,000 Bonds payable-due Dec. 31, Year 6 4,940,000 Current liabilities 2,040,000 US$19,740,000 Year 1 US$ 7,440,000 6,440,000 4,840,000 1,040,000 US$19,760,000 US$ 5,140,000 7,140,000 4,940,000 2,540,000 US$19,760,000 INCOME STATEMENT For the year ended December 31, Year 2 Sales US$44,000,000 Cost of purchases 34,320,000 Change in inventory 600,000 Depreciation expense 700,000 Other expenses 5,620,000 41, 240,000 Profit US$ 2,760,000 Additional Information Exchange rates Dec. 31, Year 1 Sep. 30, Year 2 Dec. 31, Year 2 Average for Year 2 US$1 = C$1.10 US$1 = C$1.07 US$1 = C$1.05 US$1 = C$1.08 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$1.06. Required: (a) Assume that Sandora's functional currency is the Canadian dollar: (1) Calculate the Year 2 exchange gain (loss) that would result from the translation of Sandora's financial statements. (Input all amounts as positive value. Omit currency symbol In your response.) Exchange gain C$ (11) Translate the Year 2 financial statements Into Canadian dollars. (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. Input all other amounts as positive values. Omit currency symbol in your response.) Income Statement-Year 2 Rate C$ Sales Cost of purchases Change in inventory Depreciation expense Other expenses (Click to select) US$ 44,000,000 x 34,320,000 x x 600,000 700,000 x 5,620,000 x ID 41, 240,000 2,760,000 Click to select) C$ Retained Earnings Statement-Year 2 US$ Rate Bal. Jan 1 7,140,000 x Profit 2,760,000 9,900,000 Dividends 2,280,000 Bal. Dec 31 7,620,000 Statement of Financial Position December 31, Year 2 US$ Rate Plant and equipment (net) 6,740,000 x Inventory 5,840,000 x Accounts receivable 6,240,000 x Cash 920,000 19,740,000 Ordinary shares 5,140,000 x Retained earnings 7,620,000 Bonds payable 4,940,000 x Current liabilities 2,040,000 x 19,740,000 (b) Assume that Sandora's functional currency is the U.S. dollar: (1) 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. (Input all amounts as positive value. Omit currency symbol in your response.) Exchange loss C$ (11) Translate the Year 2 financial statements into Canadian dollars. (Round the values in the "Rate" column to 2 decimal places. Loss amounts should be indicated with a minus sign. Input all other amounts as positive values. Omit currency symbol in your response.) Income Statement - Year 2 Rate C$ Sales Cost of purchases Change in inventory Depreciation expense Other expenses Total Profit Other comprehensive loss loss Comprehensive income US$ 44,000,000 34,320,000 600,000 700,000 5,620,000 41, 240,000 2,760,000 unrealized exchange Year 2 Rate C$ Retained Earnings Statement US$ Bal. Jan 1 7,140,000 x Profit 2,760,000 x 9,900,000 Dividends 2,280,000 Bal. Dec 31 7,620,000 Rate CS Statement of Financial Position - December 31, Year 2 US$ Plant and equipment (net) 6,740,000 x Inventory 5,840,000 * Accounts receivable 6,240,000 x Cash 920,000 x 19,740,000 Ordinary shares 5,140,000 x Retained earnings 7,620,000 Accumulated foreign exchange adjustments Bonds payable 4,940,000 x Current liabilities 2,040,000 x 19,740,000