Foreign Sub is a wholly owned subsidiary of U.S. Domestic Corporation. U.S. Domestic Corporation acquired the subsidiary several years ago. The financial statements for Foreign Sub for 2017 in its own currency appear in Exhibit 8.29. The exchange rates between the U.S. dollar and the foreign currency of the subsidiary are

December 31, 2016 .................. $10.0:1FC
Average, 2017 .............................. $ 8.0:1FC
December 31, 2017 ................... $ 6.0:1FC

On January 1, 2017, Foreign Sub issued FC100 of long-term debt and FC100 of common stock in the acquisition of land costing FC200. Operating activities occurred evenly over the year.

REQUIRED

a. Assume that the currency of Foreign Sub is the functional currency. Compute the change in the cumulative translation adjustment for 2017. Indicate whether the change increases or decreases shareholders’ equity.

b. Assume that the U.S. dollar is the functional currency. Compute the amount of the translation gain or loss for 2017. Indicate whether the amount is a gain or loss.

Exhibit 8.29.

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Exhibit 8.29 Foreign Sub Financial Statement Data (Problem 8.24) December 31 2016 2017 Cash FC 100 FC 150 Accounts receivable 300 350 Inventories 350 400 Land 500 700 Copyright 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicaad in e or in part. WCN 02-200-2na Total Assets FC 1,250 FC 1,600 FC 150 Accounts payable Long-term debt Common stock FC 250 200 300 500 600 Retained earnings Total Liabilities and Equities 400 450 FC 1,250 FC 1,600 For 2017 Sales FC 4,000 Cost of goods sold Selling and administrative expenses (3,200) (400) Income taxes (160) Net Income FC 240 (190) Dividend declared and paid on December 31 Increase in Retained Earnings FC 50