On September 25, 20X1, Dorian Company, a U.S. based firm, establishes a new subsidiary in Norway called Fiorta by investing 4 million Krone in exchange for 100,000 shares of common stock. The exchange rate on September 25, 20X1 is $.10 per Krone. On September 30, 20X1, when the exchange rate is 0.12 per Krone, Fiorta purchases inventory for 2.1 million Krone. On October 24, 201X1, Fiorta sells one third of the inventory for 1.2 million Krone and on December t, 20X1 another one third of the inventory, also for 1.2 Krone. The exchange rate is $0.09 and $0.10 per Krone on October 24 and December 6, respectively. Dorian and Fiorta issue financial statements quarterly and annually. The exchange rate is 0.11 per Krone on December 31, 20X1. Required:

1. Assume that Fiona's functional currency is the U.S. dollar. What method should be used for translating Fiorta's financial statement result to the U.S. Dollar?
2. Show the effect of the translations on (1) Fiorta's balance sheet and income statement (2) translate the amount into U.S. dollars under the current rate method using the following format.