On January 1, 20X1, Popular Creek Corporation organized SunTime Company as a subsidiary in Switzerland with an initial investment cost of Swiss francs (SFr) 67,000. SunTimes December 31, 20X1, trial balance in SFr is as follows:

	Debit				Credit
Cash	SFr	7,800
Accounts Receivable (net)		23,500
Receivable from Popular Creek		6,900
Inventory		29,000
Plant & Equipment		106,000
Accumulated Depreciation					SFr	10,900
Accounts Payable						12,600
Bonds Payable						52,500
Common Stock						67,000
Sales						164,200
Cost of Goods Sold		73,000
Depreciation Expense		10,900
Operating Expense		32,500
Dividends Paid		17,600
Total	SFr	307,200			SFr	307,200

Additional Information

1. The receivable from Popular Creek is denominated in Swiss francs. Popular Creek's books show a $5,900 payable to SunTime.
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	$48,910
Adjustment for changes in net asset position during year:
Net income for year	35,850
Dividends paid	(13,552)
Net assets translated at:
Rates during year	71,208
Rates at end of year
Change in other comprehensive income translation adjustment during year net increase	(71,208)
Accumulated other comprehensive income translation adjustment January 1	HELP
Change in other comprehensive income translation adjustment December 31	$(71,208)