I need help with part b please

ments Case 7-1 Columbia Corporation Columbia Corporation, a U.S.-based company, acquired a 100 percent interest in Swoboda Company in Lodz, Poland, on January 1, Year 1, when the exchange rate for the Polish zloty (PLN) was $0.25. The financial statements of Swoboda as of December 31, Year 2, two years later, are as follows: My Financial Stainment 325 BALANCE SHEET December 31, Year 2 Assets Cash Accounts recolvable net Inventory Equipment Less Accumulated depreciation Building Less: Accumulated depreciation Land Total assets PLN 1,000,000 1.650.000 4,250,000 12,500,000 14.250,000) 36,000,000 (15.150.000 3,000,000 PUN 39.000.000 Liabilities and Stockholders' Equity Accounts payable Long-term debt Common stock Additional paid in capital Retained earnings Total liabilities and stockholders equity PLN 1.250.000 25,000,000 2.500.000 7.500.000 2.750.000 PLN 39,000,000 STATEMENT OF INCOME AND RETAINED EARNINGS For the Year Ending December 31, Year 2 Sales PLN 12.500.000 Cost of goods sold 16.000.000) Depreciation expense-equipment (1.250.000) Depreciation expense-building 1900,000) Research and development expense (600.000) Other expenses including taxes) (500,000) Net Income PLN 3.250,000 Plus: Retained earnings. 1/1/12 250,000 (750.000) Less: Dividends. Year 2 PLN 2,750,000 Retained earnings. 12/31/42 Additional information: The January 1. Year 2. beginning inventory of PLN 3,000,000 was acquired on December 15. Year 1, when the exchange rate was 80.215. Purchases of inventory dur- ing Year 2 were acquired uniformly throughout the year. The December 31. Year 2. ending inventory of PLN 4,250,000 was acquired evenly throughout the fourth quarter of Year 2 when the exchange rate was $0.16. All fixed assets were on the books when the subsidiary was acquired except for PLN 2,500,000 of equipment, which was acquired on January 3, Year 2, when the exchange rate was $0.18. and PLN 6,000,000 in buildings, which were acquired on Augusts. Year 2, when the exchange rate was SO. 17. Equipment is depreciated on a straight-line basis over 10 years. Buildings are depreciated on a straight-line basis over 40 years lanriation is taken in the year of acquisition. er Seven Dividends were declared and paid on December 15, Year 2, when the exchange rate was S0.155 Other exchange rates for Year 2 are: $0.200 0.175 0.150 January 1 Average for the year December 31 Required: 1. Translate Swoboda's financial statements into U.S. dollars in accordance with U.S. GAAP at December 31, Year 2, using the following scenarios. a. Assume the Polish zloty is the functional currency. The December 31, Year 1. retained earnings amount that appeared in Swoboda's translated financial statements was $56,250. The December 31, Year 1, cumulative translation adjustment that appeared in Swoboda's translated balance sheet was negative $506,250. b. Assume the U.S. dollar is the functional currency. The December 31, Year 1, retained earnings amount that appeared in Swoboda's remeasured financial statements was $882,500. c. Assume the same scenario described in (b) except Swoboda has no long-term debt. Instead, Swoboda has common stock of PLN 10,000,000 and additional paid-in capital of PLN 25,000,000. The December 31, Year 1, retained earnings amount that appeared in Swoboda's remeasured financial statements was negative $367,500 2. Explain why the sign of the translation adjustments in (la), (1b), and (1c) is positive or negative