On December 31, Year 2, PAT Inc. of Halifax acquired 90% of the voting shares of Gioco Limited of Italy, for 690,000 euros (). On the acquisition date, the fair values equalled the carrying amounts for all of Gioco's identifiable assets and liabilities. Selected account balances from Gioco's general ledger on December 31, Year 2, were as follows: Equipment Building Accumulated amortization Common shares Retained earnings 150,000 1,350,000 195,000 600,000 96,000 Gioco purchased the building and equipment on January 1, Year 1. The condensed trial balance of Gioco for the year ending December 31, Year 5, was as follows: Accounts receivable Inventory Building Equipment Cost of goods purchased Change in inventory Amortization expense Other expenses Dividends paid Total debits Current monetary liabilities Common shares Retained earnings, beginning Sales Accumulated amortization Total credits 197,000 255,000 1,350,000 350,000 1,080,000 120,000 130,000 470,000 300,000 4, 252,000 682,000 600,000 300,000 2,250,000 420,000 4, 252,000 Additional Information Gioco's sales, inventory purchases, and other expenses occurred uniformly over the year. Gioco's inventory on hand at the end of each year was purchased uniformly over the last quarter. On December 31, Year 4, the inventories totalled 375,000, and on December 31, Year 5, they totalled 255,000. On January 1, Year 5, Gioco purchased equipment for 200,000. The equipment has an estimated useful life of eight years and a residual value of 5,000. Gioco uses the double-declining-balance method to calculate amortization expense. There were no other purchases of property, plant, and equipment between Year 2 and Year 5. The dividends were declared and paid on January 1, Year 5. The exchange rates for the euro and the Canadian dollar were as follows: $1 = 0.50 $1 = 0.60 $1 = 0.68 Jan. 1, Year 1 Dec. 31, Year 2 Average for the Year 4 fourth quarter Dec. 31, Year 4/Jan. 1, Year 5 Dec. 31, Year 5 Average for Year 5 Average for the Year 5 fourth quarter $1 = 0.70 $1 = 0.80 $1 = 0.76 $1 = 0.79 Required: (a) Translate into Canadian dollars the following items on Gioco's financial statements for the year ended December 31, Year 5, assuming that Gioco's functional currency is the Canadian dollar: (Do not round intermediate calculations. Round the "Rate" to 2 decimal places and "C$" to nearest whole number. Omit $ sign in your response.) Rate C$ (i) Accounts receivable (ii) Inventory (iii) Equipment 197,000/ 255,000 / 150,000/ 200,000/ 50,000/ 370,000/ 600,000/ Accumulated (iv) amortization (v) Common shares (b) Translate into Canadian dollars the following items on Gioco's financial statements for the year ended December 31, Year 5, assuming that Gioco's functional currency is the euro: (Do not round intermediate calculations. Round the "Rate" to 2 decimal places and "C$" to nearest whole number. Omit $ sign in your response.) Rate C$ Cost of goods (i) purchased 1,080,000/ (ii) Amortization expense 130,000/ (iii) Inventory 255,000/ (iv) Common shares 600,000/ (c) For Gioco, which functional currency would show the strongest current ratio for the company's translated financial statements? Canadian dollar Euro US dollar (d) Prepare an independent calculation of the unrealized exchange gains or losses to be included in other comprehensive income for Year 5, assuming that Gioco's functional currency is the euro. (Do not round intermediate calculations. Negative amounts should be indicated by a minus sign. Round the "Rate" to 2 decimal places and "C$","" to nearest whole number. Omit $ and sign in your response.) Rate Shareholders' equity, beginning of year Net income Dividends paid Shareholders' equity, end of year Actual shareholders' equity, end of year Exchange adjustment to be reported in other comprehensive income UTI