On January $1,20$X$1,$ Popular Creek Corporation organized SunTime Company as a subsidiary in Switzerland with an initial investment cost of Swiss francs $($SFr$)67,000.$ SunTime$$s December $31,20$X$1,$ trial balance in SFr is as follows:

Debit Credit

Cash SFr $7,300$

Accounts Receivable $($net$)22,000$

Receivable from Popular Creek $7,000$

Inventory $27,000$

Plant & Equipment $106,000$

Accumulated Depreciation SFr $11,400$

Accounts Payable $13,400$

Bonds Payable $52,500$

Common Stock $67,000$

Sales $156,200$

Cost of Goods Sold $71,000$

Depreciation Expense $11,400$

Operating Expense $31,000$

Dividends Paid $17,800$

Total SFr $300,500$ SFr $300,500$

Additional Information

The receivable from Popular Creek is denominated in Swiss francs. Popular Creek's books show a $$6,000$ payable to SunTime.

Purchases of inventory goods are made evenly during the year. Items in the ending inventory were purchased November $1.$

Equipment is depreciated by the straight$-$line method with a $10-$year life and no residual value. A full year$$s depreciation is taken in the year of acquisition. The equipment was acquired on March $1.$

The dividends were declared and paid on November $1.$

Exchange rates were as follows:

SFr $

January $11=0\mathrm{.}73$

March $11=0\mathrm{.}74$

November $11=0\mathrm{.}77$

December $311=0\mathrm{.}80$

$20$X$1$ average $1=0\mathrm{.}75$

The Swiss franc is the functional currency.

Required:

a$.$ POPULAR CREEK CORPORATION AND SUBSIDIARY

Proof of Translation Adjustment

Year Ended December $31,20$X$1$

U$.$S Dollars

Net assets at beginning of year

Adjustment for changes in net asset position during year:

Net income for year

Dividends paid

Net assets translated at:

Rates during year

Rates at end of year

Change in other comprehensive income translation adjustment during year net increase

Accumulated other comprehensive income translation adjustment January $1$

Change in other comprehensive income translation adjustment December $31$ Prepare a proof of the translation adjustment.