1. Belhurst Castle Industries, a U.S.company, established a subsidiary in Mexico on 1/1/x1 by investing MXN 600,000. On that date, the foreign subsidiary borrowed MXN 1,000,000 from a local bank, on a 10-year note, to purchase property&equipment. The company's opening balance sheet is as follaws Balance Sheet 600,000 LTD 1,000,000 Common Stock Property & Equipment 600,000 Total During Year X1, the Mexican subsidiary generated sales af MXN 2,000,000 and net income af MXN 220,000. Dividends in the amounts of MXN 35,000 and 45,000 were paid to its parent on 6/S/x1 and 12/7/x1, respectively. Inventory was acquired evenly throughout the year with ending inventory acquired on 11/25/ The Mexican subsidiary's financial statements and relevant FX rates are as folows: Exchange Rates 1 MXN USD 0.07xX 1/x1 6/s/xi 11/25/x1 12/7x1 12/31/x1 Average for X1 0078 0082 0081 MXN Fx Rate USO Fx Rate USD Gross Profit Depreciation Expense Other Operating Expense Income Before Tax Income Tax Net Income Retained Earnings, 1/1/x1 Net Income, Year X1 Dividends 6/S/x1 Dividends 12/7/x1 Retained Earnings, 12/31/x1 (35,000) 45,000) PPE (100,000) Total Assets Accounts Payable Long Term Loans Payable Common Stock Retained Earnings, 12/31/x1 Total Liabilities & Stockholders Equity a. Translate the financial statements to USD assuming the MXN is the entity's functional currency b. Translate the financial statements to USD assuming the USD is the entity's functional currency. Additional information, if needed Net Assets, 1/1/x1 Net Income, X1 Dividends 6/s/xi Dividends 12/7/x1 Net Assets, 12/31/x Net Assets, 12/31/x1 current FX rate Beginning Inventory Ending Inventory COGS Net Monetary Liabilities, 1/1/x1 Increase in monetary assets Sales Purchase of inventory other operating expenses Dividends G/s/x1 Dividends 12/7/x1 Net monetary Liabilities, 12/31/x1 Net monetary Liabilities, 12/31/x1 current FX rate