17. Brookhurst Company (a U.S. based company) established a subsidiary in South Africa on January 1, Year 1, by investing 300,000 South African rand (ZAR) when the exchange rate was US\$0.09/ZAR 1. On that date, the foreign subsidiary borrowed ZAR 500,000 from local banks on a 10-year note to finance the acquisition of plant and equipment. The subsidiary's opening balance sheet (in ZAR) was as follows: During Year I, the foreign subsidiary generated sales of ZAR 1,000,000 and net income of ZAR 110,000. Dividends in the amount of ZAR 20,000 were paid to the parent on June 1 and December 1 . Inventory was acquired evenly throughout the year, with ending inventory acquired on November 15, Year 1. The subsidiary's ZAR financial statements for the year ended December 31, Year 1, are as follows: Statement of Retained Earnings Year 1 \begin{tabular}{lr} \hline \multicolumn{2}{c}{ Statement of Retained Earnings Year 1} \\ \hline & \multicolumn{1}{c}{ ZAR } \\ \hline Retained carnings, 1/1/Y1 & 0 \\ Net income & 110,000 \\ Dividends & (40,000) \\ Retained earnings, 12/31/Y1 & 70,000 \\ \hline \end{tabular} Page 312 \begin{tabular}{|c|c|} \hline \multicolumn{2}{|c|}{ Balance Sheet December 31, Year 1} \\ \hline & ZAR \\ \hline Cash & 80,000 \\ \hline Receivables & 150,000 \\ \hline Inventory & 270,000 \\ \hline Plant and equipment (net) & 450,000 \\ \hline Total assets & 950,000 \\ \hline Accounts payable & 80.000 \\ \hline Long-term debt & 500.000 \\ \hline Common stock & 300,000 \\ \hline Retained earnings, 12/31/Y1 & 70,000 \\ \hline Total liabilities and stockholders' equity & 250.000 \\ \hline Relevant exchange rates for Year I are as fol & \\ \hline January 1. Year I & $0.090 \\ \hline June I, Year I & 0.095 \\ \hline Average for Year 1 & 0.096 \\ \hline November 15, Year 1 & 0.100 \\ \hline \end{tabular} Required: a. Translate the South African subsidiary's financial statements into U.S. dollars, assuming that the South African rand is the functional currency. Compute the translation adjustment by considering the impact of exchange rate changes on the subsidiary's net assets. b. Translate (remeasure) the South African subsidiary's financial statements into U.S. dollars, assuming that the U.S. dollar is the functional currency. Compute the translation adjustment (remeasurement gain or loss) by considering the impact of exchange nate changes on the subsidiary's net monetary asset or liability position