Trident Europe's Translation Loss after Depreciation of the Euro: Temporal Method (a) Dollar retained earaings betore depreciation are the cumulative sum of additions to rotained earnings of at prior years, transtated at exchange rates in each year: (b) Tranelated into doliaro at the same fale as betore deprociation of tho ouro (c) Under the temporal method, the transiation loss or $160,000 would be cloted into retained earnings through the income statement rather than loft as a soparate line iom as shown here. Ending retained earnings would actually be $7,711,2005160,000=$7,551,200. 1. Trident Europe (A). Using facts in the chapter for Trident Europe, assume the exchange rate on January 2 , 2006 , in Exhibit 10.4 dropped in value from $1.2000/ to $0.9000/ (rather than to $1.0000/ ). Recalculate Trident Europe's translated balance sheet for January 2, 2006, with the new exchange rate using the current rate method. a. What is the amount of translation gain or loss? b. Where should it appear in the financial statements? 2. Trident Europe (B). Using facts in the chapter for Trident Europe, assume as in Problem 1 that the exchange rate on January 2, 2006, in Exhibit 10.4 dropped in value from $1.2000/ to $0.9000/ (rather than to $1.0000/). Recalculate Trident Europe's translated balance sheet for January 2, 2006, with the new exchange rate using the temporal rate method. a. What is the amount of translation gain or loss? b. Where should it appear in the financial statements? c. Why does the translation losspor gain under the temporal method differ from the loss or gain under the current rate method? 3. Trident Europe (C). Using facts in the chapter for Trident Europe, assume the exchange rate on January 2,2006 , in Exhibit 10.4 appreciated from $1.2000/ to $1.500/. Calculate Trident Europe's translated balance sheet for January 2, 2006, with the new exchange rate using the current rate method. a. What is the amount of translation gain or loss? b. Where should it appear in the financial statements