Assume that Folgate has a subsidiary company based in Japan.

Requirements
1. Translate into dollars the foreign-currency balance sheet of the Japanese subsidiary of Folgate.
Yen
Assets...................................... 480,000,000
Liabilities................................ 115,000,000
Stockholders equity:
Common stock.................... 40,000,000
Retained earnings................ 325,000,000
480,000,000
When Folgate acquired this subsidiary, the Japanese yen was worth $0.0095. The current exchange rate is $0.0110. During the period when the subsidiary earned its income, the average exchange rate was $0.0100 per yen. Before you perform the foreign-currency translation calculations, indicate whether Folgate has experienced a positive or a negative translation adjustment. State whether the adjustment is a gain or a loss, and show where it is reported in the financial statements.
2. To which company does the foreign-currency translation adjustment “belong”? In which company’s financial statements will the translation adjustment be reported?