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$ 6,780,000 Inventory 5,880,000 Accounts receivable Cash Ordinary shares Retained earnings Bonds payable-due Dec. 31, Year 6 Current liabilities 6,280,000 960,000 US$19,900,000 US$ 5,180,000 7,660,000 4,980,000 Year 1 US$ 7,480,000 6,480,000 4,880,000 1,080,000 US$19,920,000 US$ 5,180,000 7,180,000 4,980,000 2,080,000 2,580,000 US$19,900,000 US$19,920,000 INCOME STATEMENT For the year ended December 31, Year 2 Sales US$48,000,000 Cost of purchases Change in inventory Depreciation expense Other expenses Profit 37,440,000 600,000 700,000 6,140,000 44,880,000 US$ 3,120,000 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$1.06. Required: (a) Assume that Sandora's functional currency is the Canadian dollar: (i) Calculate the Year 2 exchange gain (loss) that would result from the translation of Sandora's financial statements. (Input all amounts as positive value. Omit currency symbol in your response.) (Click to select) C$ (ii) 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 US$ 48,000,000 Rate Sales Cost of purchases Change in inventory Depreciation expense Other expenses (Click to select) (Click to select) 37,440,000 600,000 700,000 x 6,140,000 x 44,880,000 3,120,000 Retained Earnings Statement-Year 2 Bal. Jan 1 Profit Dividends US$ Rate C$ 7,180,000 x 3,120,000 10,300,000 2,640,000 Bal. Dec 31 7,660,000 C$ Statement of Financial Position - December 31, Year 2 Rate Plant and equipment (net) Inventory US$ 6,780,000 x 5,880,000 Accounts receivable Cash Ordinary shares Retained earnings Bonds payable Current liabilities 6,280,000 x 960,000 x 19,900,000 5,180,000 7,660,000 4,980,000 2,080,000 x 19,900,000 (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. (Input all amounts as positive value. Omit currency symbol in your response.) (Click to select) C$ (ii) 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 Sales Cost of purchases Change in inventory Depreciation expense Other expenses Total Profit Other comprehensive (Click to select) + (Click to select) + (Click to select) US$ 48,000,000 37,440,000 x 600,000 x 700,000 x 6,140,000 x 44,880,000 3,120,000 - x unrealized exchange Rate C$ Retained Earnings Statement Bal. Jan 1 Profit Dividends Bal. Dec 31 US$ 7,180,000 x 3,120,000 10,300,000 2,640,000 x 7,660,000 - Year 2 Rate C$ Statement of Financial Position - December 31, Year 2 Plant and equipment (net) Inventory Accounts receivable US$ 6,780,000 x Rate C$ 5,880,000 6,280,000 Cash Ordinary shares Retained earnings Bonds payable Current liabilities Accumulated foreign exchange adjustments 960,000 x 19,900,000 5,180,000 7,660,000 4,980,000 2,080,000 x 19,900,000