11. [Analysis of foreign operations] Exhibit (5P-4 contains extracts from the 1991 Annual Report of Commercial Intertech regarding its foreign operations. The effect of exchange rate changes on cash for 1991 was $(2,075,000); inventories at October 31, 1990 and 1991 were $59,762.000 and $51,777,000, respectively The foreign currency translation footnote discusses a sub- sidiary in Switzerland.

a. What was the functional currency used to account for that subsidiary? Explain.

b. What economic events caused the $3,213,000 gain to appear in the company's financial statements?

c. Discuss whether the $3,213,000 gain: (i) Should be considered operating income (ii) Should be considered 1991 income