Brookhurst Company (a U.S.-based company) established a subsidiary in South Africa on January 1, Year 1, by investing 300,000 South African rand (ZAR) when the exchange rate was US$0.09/ZAR 1. On that date, the foreign subsidiary borrowed ZAR 500,000 from local banks on a 10-year note to finance the acquisition of plant and equipment. The subsidiary's opening balance sheet (in ZAR) was as follows:

During Year 1, the foreign subsidiary generated sales of ZAR 1,000,000 and net income of ZAR 110,000. Dividends in the amount of ZAR 20,000 were paid to the parent on June 1 and December 1. Inventory was acquired evenly throughout the year, with ending inventory acquired on November 15, Year 1. The subsidiary's ZAR financial statements for the year ended December 31, Year 1, are as follows:
Income Statement Year 1
ZAR
Sales1,000,000
Cost of goods sold (600,000)
Gross profit400,000
Depreciation expense(50,000)
Other operating expenses(150,000)
Income before tax200,000
Income taxes(90,000)
Net income€¦€¦€¦€¦€¦€¦€¦. 110,000
Statement of Retained Earnings Year 1
ZAR
Retained earnings, 1/1/Y10
Net income110,000
Dividends (40,000)
Retained earnings, 12/31/Y1 70,000
Balance Sheet December 31, Year 1
ZAR
Cash80,000
Receivables150,000
Inventory 270,000
Plant and equipment (net)450,000
Total assets950,000
Accounts payable80,000
Long-term debt500,000
Common stock300,000
Retained earnings, 12/31/Y1 70,000
Total liabilities and stockholders' equity€¦.. 950,000
Relevant exchange rates for Year 1 are as follows (US$ perZAR):
January 1, Year 1 $0,090
June 1, Year 10.095
Average for Year 10.096
November 15, Year 10.100
December 1, Year 1 0.105
December 31, Year 1 0.110
Required:
a. Translate the South African subsidiary's financial statements into U.S. dollars, assuming that the South African rand is the functional currency. Compute the translation adjustment by considering the impact of exchange rate changes on the subsidiary's net assets.
b. Translate (remeasure) the South African subsidiary's financial statements into U.S. dollars, assuming that the U.S. dollar is the functional currency. Compute the translation adjustment (remeasurement gain or loss) by considering the impact of exchange rate changes on the subsidiary's net monetary asset or liability position.

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Balance Sheet January 1, Year l 300,000 Long-term debt Cash. Plant and equipment 500,000 300.000 800.000 500.000 Capital stock 00000 Total