The Thode Company established a wholly-owned subsidiary in Saudi Arabia on January 1, 2013, when the exchange

Question:

The Thode Company established a wholly-owned subsidiary in Saudi Arabia on January 1, 2013, when the was $0.30/riyal (SAR). Of Thode's initial $60,000,000 investment, $30,000,000 was used to acquire plant assets (ten-year life) and $15,000,000 was used to acquire inventory. The remaining amount was initially held as cash by the subsidiary.
During 2013, the subsidiary reported net income of SAR20,000,000. Inventory purchases of SAR 15,000,000 were made evenly during the year. It paid dividends of SAR 10,000,000 on September 30, when the was $0.255/SAR. No other transactions occurred between the subsidiary and the parent. The subsidiary's condensed income statement appears below:

The average rate during the year was $0.265/SAR. On the balance sheet date, it was $0.25/SAR.
Required
a. Assuming the functional currency is the riyal, translate the subsidiary's 2013 income statement and December 31,2013, balance sheet into dollars and prepare an analysis of the subsidiary's translation gain or loss for 2013.
b. Repeat the requirements of part a, assuming the subsidiary's functional currency is the U.S. dollar.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...