4 On December 18, 2020, Stephanie Corporation acquired 100 percent of a Swiss company for 4.012 million Swiss francs (CHF), which is Indicative of book and fair value. At the acquisition date, the exchange rate was $1.00 = CHF 1. On December 18, 2020, the book and fair values of the subsidiary's assets and liabilities were as follows: Cash CHF 812, 900 Inventory 1, 312, 090 Property, plant, and equipment 4, 012,060 Notes payable (2, 124,600) Stephanle prepares consolidated financial statements on December 31, 2020. By that date, the Swiss franc has appreciated to $1.10 = CHF 1. Because of the year-end holidays, no transactions took place prior to consolidation. a. Determine the translation adjustment to be reported on Stephanie's December 31, 2020, consolidated balance sheet, assuming that the Swiss franc is the Swiss subsidiary's functional currency. What is the economic relevance of this translation adjustment? b. Determine the remeasurement gain or loss to be reported In Stephanie's 2020 consolidated net income, assuming that the U.S. dollar is the functional currency. What is the economic relevance of this remeasurement gain or loss? 31. Translation adjustment5 Sullivan's Island Company began operating a subsidiary in a foreign country on January 1, 2020, by investing capital In the amount of 84,000 pounds. The subsidiary immediately borrowed 200,000 pounds on a five-year note with 10 percent Interest payable annually beginning on January 1, 2021. The subsidiary then purchased for 284,000 pounds a building that had a 10-year expected life and no salvage value and is to be depreciated using the straight-line method. Also on January 1, 2020, the subsidiary rented the building for three years to a group of local attorneys for 3,600 pounds per month. By year-end, rent payments totaling 86,000 pounds had been received, and 17,200 pounds was in accounts receivable. On October 1, 2020, 3,600 pounds was paid for a repair made to the building. The subsidiary transferred a cash dividend of 11,700 pounds back to Sullivan's Island Company on December 31, 2020. The functional currency for the subsidiary is the pound. Currency exchange rates for 1 pound follow: January 1, 2020 $ 2.10 = 1 Pound october 1, 2020 2. 15 = 1 December 31, 2020 2.18 Average for 2020 2.14 = Prepare an Income statement, statement of retained earnings, and balance sheet for this subsidiary in pounds and then translate these amounts Into U.S. dollars. Complete this question by entering your answers in the tabs below. Income Retained Statement Earnings Balance Sheet Prepare a Income Statement. (Amounts to be deducted should be indicated by a minus sign.) SULLIVAN'S ISLAND COMPANY Income Statement For the Year Ended December 31, 2020 Pounds U.S. Dollars