Using facts in the chapter for Ganado Europe, assume that the exchange rate on January 2, 2016, in Exhibit 11.6 dropped in value from $1.1300/ to $0.8800/.

Recalculate Ganado Europe's translated balance sheet for January 2, 2016, with the new exchange rate using the temporal rate method as shown in the popup window,

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EXHIBIT 11.6 Ganado Europe's Translation Loss After Depreciation of the Euro: Temporal Method
					December 31, 2015						January 2, 2016
Assets		In Euros ()			Exchange Rate (US$/euro)			Translated Accounts (US$)			Exchange Rate (US$/euro)			Translated Accounts (US$)
Cash		2,000,000			1.1300			$2,260,000			0.8800			$1,760,000
Accounts receivable		3,500,000			1.1300			3,955,000			0.8800			3,080,000
Inventory		2,800,000			1.1490			3,217,200			1.1490			3,217,200
Net plant and equipment		5,200,000			1.2070			6,276,400			1.2070			6,276,400
Total		13,500,000						$15,708,600						$14,333,600
Liabilities and Net Worth
Accounts payable		1,500,000			1.1300			$1,695,000			0.8800			$1,320,000
Short-term bank debt		1,300,000			1.1300			1,469,000			0.8800			1,144,000
Long-term debt		1,600,000			1.1300			1,808,000			0.8800			1,408,000
Common stock		1,500,000			1.2070			1,810,500			1.2070			1,810,500
Retained earnings		7,600,000			1.1701	(a)		8,926,100			1.1701	(b)		8,926,100
Translation gain (loss)												(c)		?
Total		13,500,000						$15,708,600						$14,333,600
(a) Dollar retained earnings before depreciation are the cumulative sum of additions to retained earnings of all prior years, translated to exchange rates each year.
(b) Translated into dollars at the same rate as before the depreciation of the euro.
(c) Under the temporal method, the translation loss would be closed into retained earnings through the income statement rather than left as a separate line item as shown here.
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a. What is the amount of translation gain or loss?

b. Where should it appear in the financial statements?

c. Why does the translation loss or gain under the temporal method differ from the loss or gain under the current rate method?

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Part 1

a. What is the amount of translation gain or loss? Enter a positive number for a gain and a negative for a loss.

$enter your response here

(Round to the nearest dollar.)

a. What is the amount of translation gain or loss?

b. Where should it appear in the financial statements?

c. Why does the translation loss or gain under the temporal method differ from the loss or gain under the current rate method?

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