1. Colper Grant is the president of Acme Brush of Brazil, the whole owned

Braziliain Subsidiary of US based Acme Brush Inc. Cooper Grant's compensation

package consists of a combination of salary and bonus. His annual bonus

is calculated as a predetermined percentage of the pre-tax annual income

earned by Acme Brush of Brazil. A condensed income statement for Acme

Brush of Brazil for the most recent year is as follows (amounts in

thousands of Brazilian reals (BRL)):

BRL

Sales 10,000

Expenses9,500

Pre-tax income 500

After translating the Brazilian real income statement to the US dollars, the

condensed income statement for Acme Brush of Brazil appears as follows

(amounts in thousand of US Dollars (USD):

Sales 3,000

Expenses3,300

Pre-tax loss -300

A. Explain how Acme Brush of Brazil's pre-tax income in BRL becamea US

dollar pretax loss. In order to receive the full credit, you are required

to show all steps in calculation.

B. Discuss whether Cooper Grant should be paid a bonus or not.