In a jointly prepared statement supporting her candidacy, the partners in Hopkins’ office showcased her successful 2-year effort to secure a $25 million contract with the Department of State, labeling it “an outstanding performance” and one that Hopkins carried out “virtually at the partner level.” None of the other partnership candidates had a comparable record in terms of successfully securing major contracts for the partnership.

Instructions
Indicate how much depreciation expense should be recorded each year for this equipment, by completing the followingtable.

Additional Information
Exchange rates
Dec. 31, Year 1 …… US$1 =CDN$1.10
Sep. 30, Year 2 …… US$1 = CDN$1.07
Dec. 31, Year 2 …… US$1 = CDN$1.05
Average for Year 2 … US$1 =CDN$1.08
Sandora declared and paid dividends on September 30, Year 2.
The inventories on hand on December 31, Year 2, were purchased when the exchange rate was US$1 = CDN$1.06.
Required:
(a) Assume that Sandora’s functional currency is the Canadian dollar:
(i) Calculate the Year 2 exchange gain (loss) that would result from the translation of Sandora’s financial statements.
(ii) Translate the Year 2 financial statements into Canadian dollars.
(b) Assume that Sandora’s functional currency is the U.S. dollar:
(i) Calculate the Year 2 exchange gain (loss) that would result from the translation of Sandora’s financial statements and would be reported in other comprehensive income.
(ii) Translate the Year 2 financial statements into Canadian dollars.
(c) Which functional currency would Sandora prefer to use if it wants to show the following:
(i) The strongest solvency position for the company
(ii) The best return on shareholders equity
Briefly explain your answers.