Translate into dollars the balance sheet of Illinois Tool Company's Italian subsidiary. When Illinois acquired the foreign subsidiary, an Italian lira was worth \(\$ 0.00080\). The current exchange rate is \(\$ 0.00085\). During the period when retained earnings were earned, the average exchange rate was \(\$ 0.00088\).

Before you perform the translation operation, predict whether the translation adjustment will be positive (a gain) or negative (a loss). Explain your answer.

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Lire Assets.. 500,000,000 Liabilities.......... 300,000,000 Stockholders' equity: Common stock......... 100,000,000 Retained earnings.. 100,000,000 500,000,000