On December $18,2024,$ Stephkado Corporation acquired $100$ percent of a Swiss company for $4\mathrm{.}019$ million Swiss

francs $($CHF$),$ which is indicative of book and fair value. At the acquisition date, the exchange rate was $$1\mathrm{.}00=$

CHF $1.$ On December $18,2024,$ the book and fair values of the subsidiary's assets and liabilities were as follows:

Cash

Inventory

Property, plant, and equipment

Notes payable

$CHF819,000$

$1,319,000$

$4,019,000$

$(2,138,000)$

Stephkado prepares consolidated financial statements on December $31,2024.$ By that date, the Swiss franc has

appreciated to $$1\mathrm{.}10=$ CHF $1.$ Because of the year$-$end holidays, no transactions took place prior to consolidation.

Property, plant, and equipment is depreciated using a units$-$of$-$production method, so no depreciation is required

from December $18$ to December $31.$ The Swiss subsidiary has no revenues and no expenses from December $18$

to December $31,$ and its book value is unchanged from December $18$ to December $31.$

Required:

a$.$ Determine the translation adjustment to be reported on Stephkado's December $31,2024,$ consolidated

balance sheet, assuming that the Swiss franc is the Swiss subsidiary's functional currency. What is the

economic relevance of this translation adjustment?

b$.$ Determine the remeasurement gain or loss to be reported in Stephkado's $2024$ consolidated net income,

assuming that the U$.$S$.$ dollar is the functional currency. What is the economic relevance of this

remeasurement gain or loss?