Below is the balance sheet and income statement of a French subsidiary of a U.S. MNE, which needs to be translated into U.S. dollars for reporting purpose. The subsidiary is at the end of its first year of operation. The historical exchange rate is $1.60/1.00 and the most recent exchange rate is $1.40/.

1. Please translate the subsidiarys financial statement using current rate method and calculate the cumulative translation adjustment (CTA)
2. Please translate the subsidiarys financial statement using temporal method and calculate the foreign exchange gain (loss)

Local Currency 2,100 1,500 3,000 6,600 1,200 1,800 2,700 900 Balance Sheet Cash Inventory (Current Value = 1800) Net fixed assets Total Assets Current liabilities Long-term debt Common stock Retained earnings Total L&E Income Statement Sales Revenue COGS Depreciation NOI Tax (40%) Profit after tax Foreign Exchange gain (loss) Net Income Dividends Addition to Retained Earnings 6,600 10,000 7,500 1,000 1.500 600 900 900 0 900 Local Currency 2,100 1,500 3,000 6,600 1,200 1,800 2,700 900 Balance Sheet Cash Inventory (Current Value = 1800) Net fixed assets Total Assets Current liabilities Long-term debt Common stock Retained earnings Total L&E Income Statement Sales Revenue COGS Depreciation NOI Tax (40%) Profit after tax Foreign Exchange gain (loss) Net Income Dividends Addition to Retained Earnings 6,600 10,000 7,500 1,000 1.500 600 900 900 0 900