Assume that our company (U.S. firm) owns a subsidiary operating in United Kingdom. The subsidiary has adopted the British pound (GBP) as its functional currency. Following are the subsidiary's financial statements (in GBP) for the most recent year: Income statement: Subsidiary (in GBP) Sales Cost of goods sold Operating expenses Depreciation Net income 12,000 (7,650) (2,235) (608) 1,508 Statement of retained earnings: Retained earnings - Beg 6,923 Net income 1,508 Dividends Retained earnings - End Balance sheet: (177) 8,253 Assets Cash Accounts receivable Inventory PPE, net Total Assets 3,075 3,114 2,799 7,186 16,175 Liabilities and Stockholders' Equity Current Liabilities 2,048 Long-term Liabilities 3,969 Common Stock 525 APIC Retained Earnings Total Liabilities & Equity 1,380 8,253 16,175 Beginning inventory Purchases Ending inventory Cost of Goods Sold 2,891 7,559 (2,799) 7,650 Land 2,836 Building 5,250 Accumulated Depreciation-Building (2,625)