Crete Ltd. is a foreign subsidiary of a Canadian parent and is located in the country of Hatos. The SFP accounts of Crete are as follows, stated in hats (H):

Cash H..............................................................40,000
Accounts receivable.......................................20,000
Inventory (at market)...................................120,000
Capital assets................................................400,000
Accumulated depreciation........................(160,000)
Long-term note receivable..........................100,000
Total assets................................................H520,000
Accounts and notes payable....................H 80,000
Bonds payable.............................................300,000
Common shares..........................................140,000
Total liabilities and equities....................H520,000

Additional Information

1. Crete Ltd. is wholly owned by Gialea Corp. Gialea established Crete when the hat was worth $1.10.

2. The capital assets were purchased when the hat was worth $1.30.

3. The bonds payable were issued when the hat was worth $1.25.

4. The long-term note receivable arose when the hat was worth $1.40.

5. The inventory was purchased when the hat was worth $1.50.

6. The current exchange rate for the hat is $1.60.

Required
a. Translate the SFP accounts of Crete Ltd. into Canadian dollars, using each of the following methods:

i) Current-rate; and

ii) Temporal.

In each case, treat the translation gain or loss as a single, balancing figure.

b. For each method, calculate the:

i) Accounting exposure; and

ii) Additional gain or loss that would result if the exchange rate one year hence were 1.85, assuming no change in the SFP accounts in hats.