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Exhibit 11.5 Ganado Europe's Translation Loss After Depreciation of the Euro: Current Rate Method December 31, 2015 January 2, 2016 Assets In Euros Exchange Rate Translated Accounts Exchange Rate Translated Accounts (5) (US$/euro) (USS) (US$/euro) (USS) Cash 1,600,000 1.2000 $ 1,920,000 1.0000 $ 1,600,000 Accounts receivable 3,200,000 1.2000 3,840,000 1.0000 3,200,000 Inventory 2,400,000 1.2000 2.880,000 1.0000 2,400,000 Net plant and equipment 4.800.000 1.2000 5.760.000 1.0000 4.800.000 Total 12,000,000 $14,400,000 $12,000,000 Liabilities and Net Worth Accounts payable 800,000 1.2000 $ 960,000 1.0000 $ 800,000 Short-term bank debt 1,600,000 1.2000 1,920,000 1.0000 1,600,000 Long-term debt 1,600,000 1.2000 1,920,000 1.0000 1,600,000 Common stock 1,800,000 1.2760 2,296,800 1.2760 2,296,800 Retained earnings 6,200,000 1.2000(a) 7,440,000 1.2000(b) 7,440,000 Translation adjustment $_(136 800) $ (1.736 800) (CTA) Total 12,000,000 $14,400,000 $12,000,000 (a) Dollar retained earnings before depreciation are the cumulative sum of additions to retained earnings of all prior years, translated at exchange rates in each year (b) Translated into dollars at the same rate as before depreciation of the euro. Current Rate Method Exhibit 11.5 illustrates translation loss using the current rate method. We assume a depreciation of the euro occurs at midnight December 31, 2015; the euro falling in value from $1.20/ to $1.00/. Assets and liabilities on the pre- depreciation balance sheet (that dated December 31, 2015) are translated at the current exchange rate of $1.2000/. Capital stock is translated at the historical rate of $1.2760/, and retained earnings are translated at a composite rate that is equivalent to having each past year's addition to retained earnings translated at the exchange rate in effect that year. The sum of retained earnings and the CTA account must "balance" the liabilities and net worth section of the balance sheet with the asset side. As shown in Exhibit 11.50, the just before depreciation (December 31, 2015) dollar translation reports an accumulated translation loss from prior periods of $136,800. This balance is the cumulative gain or loss from translating euro statements into dollars in prior years. After the depreciation (January 2, 2016), Ganado Corporation translates assets and liabilities at the new exchange rate of $1.0000/. Equity accounts, including retained earnings, are translated just as they were before depreciation, and as a result, the cumulative translation loss increases to $1,736,800. The increase of $1,600,000 in this account (from a cumulative loss of $136,800 to a new cumulative loss of $1,736,800) is the translation loss measured by the current rate method. This translation loss is a decrease in equity, measured in the parent's reporting currency, of "net exposed assets." An exposed asset is an asset whose value drops with the depreciation of the functional currency and rises with an appreciation of that currency. Net exposed assets in this context are exposed assets minus exposed liabilities. Net exposed assets are positive ("long) if exposed assets exceed exposed liabilities. They are negative ("short") if exposed assets are less than exposed liabilities. Exhibit 11.5 Ganado Europe's Translation Loss After Depreciation of the Euro: Current Rate Method December 31, 2015 January 2, 2016 Assets In Euros Exchange Rate Translated Accounts Exchange Rate Translated Accounts (5) (US$/euro) (USS) (US$/euro) (USS) Cash 1,600,000 1.2000 $ 1,920,000 1.0000 $ 1,600,000 Accounts receivable 3,200,000 1.2000 3,840,000 1.0000 3,200,000 Inventory 2,400,000 1.2000 2.880,000 1.0000 2,400,000 Net plant and equipment 4.800.000 1.2000 5.760.000 1.0000 4.800.000 Total 12,000,000 $14,400,000 $12,000,000 Liabilities and Net Worth Accounts payable 800,000 1.2000 $ 960,000 1.0000 $ 800,000 Short-term bank debt 1,600,000 1.2000 1,920,000 1.0000 1,600,000 Long-term debt 1,600,000 1.2000 1,920,000 1.0000 1,600,000 Common stock 1,800,000 1.2760 2,296,800 1.2760 2,296,800 Retained earnings 6,200,000 1.2000(a) 7,440,000 1.2000(b) 7,440,000 Translation adjustment $_(136 800) $ (1.736 800) (CTA) Total 12,000,000 $14,400,000 $12,000,000 (a) Dollar retained earnings before depreciation are the cumulative sum of additions to retained earnings of all prior years, translated at exchange rates in each year (b) Translated into dollars at the same rate as before depreciation of the euro. Current Rate Method Exhibit 11.5 illustrates translation loss using the current rate method. We assume a depreciation of the euro occurs at midnight December 31, 2015; the euro falling in value from $1.20/ to $1.00/. Assets and liabilities on the pre- depreciation balance sheet (that dated December 31, 2015) are translated at the current exchange rate of $1.2000/. Capital stock is translated at the historical rate of $1.2760/, and retained earnings are translated at a composite rate that is equivalent to having each past year's addition to retained earnings translated at the exchange rate in effect that year. The sum of retained earnings and the CTA account must "balance" the liabilities and net worth section of the balance sheet with the asset side. As shown in Exhibit 11.50, the just before depreciation (December 31, 2015) dollar translation reports an accumulated translation loss from prior periods of $136,800. This balance is the cumulative gain or loss from translating euro statements into dollars in prior years. After the depreciation (January 2, 2016), Ganado Corporation translates assets and liabilities at the new exchange rate of $1.0000/. Equity accounts, including retained earnings, are translated just as they were before depreciation, and as a result, the cumulative translation loss increases to $1,736,800. The increase of $1,600,000 in this account (from a cumulative loss of $136,800 to a new cumulative loss of $1,736,800) is the translation loss measured by the current rate method. This translation loss is a decrease in equity, measured in the parent's reporting currency, of "net exposed assets." An exposed asset is an asset whose value drops with the depreciation of the functional currency and rises with an appreciation of that currency. Net exposed assets in this context are exposed assets minus exposed liabilities. Net exposed assets are positive ("long) if exposed assets exceed exposed liabilities. They are negative ("short") if exposed assets are less than exposed liabilities