Freedom Technology Company produced various types of household electronic equipment, which it sold primarily through two large retail store chains in the United States. On October 1, 20x1, Freedom established a wholly owned subsidiary in South Korea, called Freedom-Korea, for the purpose of assembling a small home version of a video arcade game that Freedom had been licensed to produce. The Korean subsidiary sold its output directly to the U.S. retailers that carried the game (as opposed to selling its output to its U.S. parent for resale to U.S. retailers).

Questions
1. Prepare translated year-end statements for Freedom-Korea using the current rate method.
2. Prepare a translated (i.e., measured) year-end statement for Freedom-Korea using its temporal method. This method requires any translation gain or loss to be included as an item in the translated income statement. You may treat any such gain or loss as a "plug" figure; that is, you are not expected to calculate it in detail.
3. Compare your two sets of translated statements and comment on any differences between them. If the company were permitted a choice as to which method to use, which method do you think they would prefer?

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EXHIBIT 1 FREEDOM-KOREA Balance Sheet As of September 30, 20x2 (millions of won) Assets Liabilities and Owners Equity Cash Receivables Inventories Fixed assets W 591 1.182 552 575 W2,900 Current liabilities W 624 Capital stock Retained earnings 1,000 1,276 W2,900 Income Statement For the Year Ended September 30, 19x2 (millions of won) Revenues Cost of sales Other expenses Net income W7,090 4.415 1,399 W1,276