Use the following information to answer Questions 4 and 5: Student Inc. was established on December 31, 20X5. Principal Corp purchased a controlling interest in Student on December 31, 20X6. Student operates in England, where the currency is the British pound. In preparation for the consolidation process, the financial statements of Student need to be translated into Canadian dollars, and the appropriate translation gain or loss calculated. Below are Student's financial statements for the year ended December 31, 20X7: Student Inc. Statement of financial position As at December 31 20x7 20X6 Cash 533,390 f 94,000 Accounts receivable 480,000 510,000 Inventory 234,600 325,000 Property, plant, and equipment net 1,130.000 855,000 Total assets . 2.377.990 . 1.784.000 297,000 200.000 497,000 1,200,000 87.000 . 1.784.000 Accounts payable 322,000 Bank loan 180,000 Total liabilities 502,000 Common shares 1,200,000 Retained earnings 675.990 Total liabilities and equity . 2.377.990 Student Inc. Statement of comprehensive income Year ended December 31, 20X7 Sales 6,351,000 Cost of goods sold 2,540,400 Gross margin 3,810,600 Selling, general, and administrative expenses 1.366.000 Net income before tax 2,444,600 Income tax expense 855,610 Net income 1,588.990 Foreign exchange rates December 31, 20X5 Average last quarter of 20X5 December 31, 20X6 December 15, 20X7 December 31, 20X7 Average rate 20X7 Average last quarter of 20X6 1 = C$1.81 1 = C$1.87 1 = C$2.05 1 = C$1.67 1 = C$1.66 1 = C$1.70 1 = C$2.10 Additional information: Inventory was purchased evenly throughout the year. Ending/beginning inventories are purchased in the last quarter of each year. Depreciation of 175,000 is included in selling, general, and administrative expenses. Equipment was purchased on December 15, 20X7, using 450,000 cash. No depreciation is claimed in 20x7. Dividends declared and paid (December 15) totalled 1,000,000. 4. Assuming that student's functional currency is the Canadian dollar, what is the amount of translation gain or loss that arises in 20x7? a) $555,490 loss b) $101,406 loss c) $196,094 gain d) $629,557 gain 5. Assuming that Student's functional currency is the British pound, what is the amount of the translated common shares? a) $1,992,000 b) $2,040,000 c) $2,172,000 d) $2,460,000