**Exhibit 11.6: Ganado Europe's Translation Loss After Depreciation of the Euro: Temporal Method**### December 31, 2015**Assets:**- **Cash:** - In Euros (€): 1,500,000 - Exchange Rate (US$/euro): 1.3000 - Translated Accounts (US$): $1,950,000- **Accounts Receivable:** - In Euros (€): 2,700,000 - Exchange Rate (US$/euro): 1.3000 - Translated Accounts (US$): $3,510,000- **Inventory:** - In Euros (€): 2,100,000 - Exchange Rate (US$/euro): 1.3190 - Translated Accounts (US$): $2,769,900- **Net Plant and Equipment:** - In Euros (€): 4,500,000 - Exchange Rate (US$/euro): 1.3750 - Translated Accounts (US$): $6,187,500- **Total Assets:** - In Euros (€): 10,800,000 - Translated Accounts (US$): $14,417,400**Liabilities and Net Worth:**- **Accounts Payable:** - In Euros (€): 600,000 - Exchange Rate (US$/euro): 1.3000 - Translated Accounts (US$): $780,000- **Short-term Bank Debt:** - In Euros (€): 1,800,000 - Exchange Rate (US$/euro): 1.3000 - Translated Accounts (US$): $2,340,000- **Long-term Debt:** - In Euros (€): 2,000,000 - Exchange Rate (US$/euro): 1.3000 - Translated Accounts (US$): $2,600,000- **Common Stock:** - In Euros (€): 2,300,000 - Exchange Rate (US$/euro): 1.3750 - Translated Accounts (US$): $3,162,500- **Retained Earnings:** - In Euros **Ganado Europe (B): Exchange Rate Case Study**Using the facts provided for Ganado Europe, assume that the exchange rate on January 2, 2016, in Exhibit 11.6 dropped from $1.3000/€ to $0.9300/€. Recalculate Ganado Europe's translated balance sheet for January 2, 2016, using the new exchange rate with the temporal rate method.**Questions:**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?---**Instructions for Calculation:**- Enter the amount of translation gain or loss as a positive number for a gain and a negative number for a loss.- Round the result to the nearest dollar.---**Answer Section:**a. Translation Gain or Loss Amount: $ ___ (Enter and round to the nearest dollar.)[Note: The actual popup window mentioned is not visible here. This is a textual representation for educational purposes.]

Retained Earnings are those Earnings which a person receives after it has paid out dividends to its shareholders.The remaining sum or amount of net income left over for the business is known as "Retained Earnings"a. Translation Loss = Assets at Revised Rate - Liabilities at Revised Rates Translation Loss = $12863400- (558000+1674000+1860000+3162500+5534900) Translation Loss = -$74000 b. The answer is "The translation gain (loss) for the year is added to the balance in the Retained Earnings account." c. The Exposed assets under Current rate method are larger than under the temporal by the amount of Inventory and Net plant and equipment.