On January 1, 20x1, Popular Creek Corporation organized SunTime Company as a subsidiary in Switzerland with an initial investment cost of Swiss francs (SFr) 65,000. SunTime's December 31, 20x1, trial balance in SFr is as follows: Credit Debit SFr 7,300 24,500 6,600 26,500 188,800 Cash Accounts Receivable (net) Receivable from Popular Creek Inventory Plant & Equipment Accumulated Depreciation Accounts Payable Bonds Payable Common Stock Sales Cost of Goods Sold Depreciation Expense Operating Expense Dividends Paid Total SFr 11,380 13,900 52,500 65,000 161,500 73,000 11,300 31,000 16,000 SFr 304,200 SFr 304,200 Additional Information 1. The receivable from Popular Creek is denominated in Swiss francs. Popular Creek's books show a $5,600 payable to SunTime. 2. Purchases of inventory goods are made evenly during the year. Items in the ending inventory were purchased November 3. 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. 4. The dividends were declared and paid on November 1. 5. Exchange rates were as follows: January 1 March 1 November 1 December 31 20x1 average SET 5 1 -0.73 1.0.74 1-0.77 1 -0.80 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 47,450 12,320 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 35,130 (35,130) CA (35,130)