On January 1, 20X1, Popular Creek Corporation organized RoadTime Company as a subsidiary in Switzerland with an initial investment cost of Swiss francs (SFr) 76,000. RoadTimes December 31, 20X1, trial balance in SFr is as follows:

	Debit		Credit
Cash	SFr	8,800
Accounts Receivable (net)		24,500
Receivable from Popular Creek		6,500
Inventory		27,000
Plant & Equipment		103,000
Accumulated Depreciation			SFr	11,700
Accounts Payable				12,300
Bonds Payable				53,000
Common Stock				76,000
Sales				149,600
Cost of Goods Sold		71,000
Depreciation Expense		11,700
Operating Expense		34,500
Dividends Paid		15,600
Total	SFr	302,600	SFr	302,600

Additional Information

1.

The receivable from Popular Creek is denominated in Swiss francs. Popular Creeks books show a $5,500 payable to RoadTime.

2.

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

3.

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

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

5. Exchange rates were as follows:

	SFr		$
January 1	1	=	0.73
March 1	1	=	0.74
November 1	1	=	0.77
December 31	1	=	0.80
20X1 average	1	=	0.75

6. The Swiss franc is the functional currency.

Required:

a.

Prepare a proof of the translation adjustment.

POPULAR CREEK CORPORATION AND SUBSIDIARY
Proof of Translation Adjustment
Year Ended December 31, 20X1
	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	0
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	0

b.

Where is the translation adjustment reported on Popular Creeks consolidated financial statements and its foreign subsidiary? (Select all that apply.)

*Cash flow statement

*statement of financial position

*income statement

*statement of comprehensive income

*statement of retained earnings