On December 18, 2013, Stephanie Corporation acquired 100 percent of a Swiss company for 3.7 million Swiss

Question:

On December 18, 2013, Stephanie acquired 100 percent of a Swiss company for 3.7 million Swiss francs (CHF), which is indicative of fair value. At the acquisition date, the was $0.70 5 CHF 1. On December 18, 2013, the fair values of the subsidiary's assets and liabilities were:
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . CHF 500,000
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000,000
Fixed assets . . . . . . . . . . . . . . . . . . . . . . . . 3,000,000
Notes payable . . . .. . . . . . . . . . . . . . . . . . . (800,000)
Stephanie prepares consolidated on December 31, 2013. By that date, the Swiss franc has appreciated to $0.75 5 CHF 1. Because of the year-end holidays, no transactions took place prior to consolidation.
a. Determine the translation adjustment to be reported on Stephanie's December 31, 2013, 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 re-measurement gain or loss to be reported in Stephanie's 2013 consolidated net income, assuming that the U.S. dollar is the functional currency. What is the economic relevance of this re-measurement gain or loss?
Financial Statements
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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...