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Ganado Europe (B).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$1.1100/euro to $0.9900/. 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.

Cash 1,200,000 1.1100 1,332,000 0.9900 1,188,000 Accounts receivable 3,000,000 1.1100 3,330,000 0.9900 2,970,000 Inventory 2,500,000 1.1330 2,832,500 1.1330 2,832,500 Net plant and equipment 5,400,000 1.1870 6,409,800 1.1870 6,409,800 Total 12,100,000 13,904,300 13,400,300 Liabilities and Net Worth Accounts payable 1,400,000 1.1100 1,554,000 0.9900 1,386,000 Short-term bank debt 1,900,000 1.1100 2,109,000 0.9900 1,881,000 Long-term debt 1,700,000 1.1100 1,887,000 0.9900 1,683,000 Common stock 1,700,000 1.1870 2,017,900 1.1870 2,017,900 Retained earnings 5,400,000 1.1591 6,336,400 1.1591 6,336,400 Translation gain (loss) ? Total 12,100,000 13,904,300 13,400,300

a. What is the amount of translation gain or loss? Enter a positive number for a gain and negative for a loss. $__(Round to the nearest dollar.)

b. Where should it appear in the financial statements?(Select the best choice below.)

A.The translation gain (loss) for the year is added to the balance in the Total Assets account.

B.The translation gain (loss) for the year is added to the balance in the Total Liabilities and Net Worth account.

C.The translation gain (loss) for the year is added to the balance in the Retained Earnings account.

D.The translation gain (loss) for the year is added to the balance in the Cumulative Translation Adjustment (CTA) account.

c. Why does the translation loss or gain under the temporal method differ from the loss or gain under the current rate method?(Select the best choice below.)

A.The exposed assets under the current rate method are larger than under the temporal method by the amount of inventory and net plant and equipment.

B.The exposed assets under the current rate method are larger than under the temporal method by the amount of accounts payable and common stock.

C.The exposed assets under the current rate method are larger than under the temporal method by the amount of cash and accounts receivable.

D.The exposed assets under the current rate method are larger than under the temporal method by the amount of short-term bank debt and long-term debt.

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