(Learning Objective 4: Measuring and explaining the foreign currency translation adjustment) Assume that Mason has a subsidiary company based in Japan.

❙ Requirements 1. Translate into dollars the foreign currency balance sheet of the Japanese subsidiary of Mason.

When Mason acquired this subsidiary, the Japanese yen was worth €0.0075. The current exchange rate is €0.0090. During the period when the subsidiary earned its income, the average exchange rate was €0.0088 per yen. Before you perform the foreign currency translation calculations, indicate whether Mason 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 fi nancial statements.

2. In which company’s fi nancial statements will the translation adjustment be reported?