7. Assume that our company owns a subsidiary operating in Germany. The subsidiary has adopted the Euro (8) as its functional currency. Following are the subsidiary's financial statements (in {) for the most recent year: Subsidiary ing Income statement Sales 9.000.000 Cost of goods sold (5,400 000) Gross Profit 3.600.000 Operating expenses (1,920.000) Depreciation (420 000) Remeasurement gain or loss Net income 1 260 000 Statement of retained earnings: BOY retained earnings 4.725,000 Net income 1 260.000 Dividends (126.000) Ending retained earnings 5.859 000 Balance sheet. Accets Cash 2 561 400 Accounts receivable 2 086.000 Inventory 2 682 000 PPE, net 4.960 800 Total Assets 12 292,200 Liabilities and Stockholders Equity Current Liabilities 1 526 400 Long-term Liabilities 3.556 800 Common Stock 600.000 APIC 750.000 Retained Eamings 5.859.000 Total Liabilities & Equity 12 292,200 continued next page