I'OI'EIgl'I Lurrency ACCOUI'I'IIIng Facts: Parent Co, a U.S. rm, paid $525,000 cash to acquire all of the stock of the British rm Sub Co when the book value of Sub's net assets was equal to fair value. This business combination occurred on December 31, 2016, when the exchange rate for British pounds was $1.50. During 201? the British pound weakened against the U.S. dollar, resulting in a year- end current exchange rate of $1.40. Average exchange rates for 201? were $1.45. Sub Co paid a 30,000 dividend to Parent Co on December 1, 2017 when the exchange rate was $1.42 per British pound. The only intercompany transaction between the rms was an $84,000 (56,000) noninterest-bearing advance by Sub Co to Parent Co that occurred on January 4, 2017 when the exchange rate was still $1.50. The advance is denominated in U.S. dollars. Sub Co's functional currency is British pounds, so the advance to Parent Co is a foreign currency transaction from Sub Co's perspective, but not to Parent Co because it is denominated in U.S. dollars. Sub Co's assets, liabilities and stockholder's equity at acquisition were as follows: British Exchang U.S. Pounds e Rate Dollars