Problem $10-31($Algo$)($LO $10-3,10-5)$

Stilton Company $($a U$.$S$.-$based company$)$ has a subsidiary in Canada that began operations at the start of $2024$ with assets of $156,000$

Canadian dollars $($CAD$)$ and liabilities of CAD $102,000.$ During this initial year of operation, the subsidiary reported a profit of CAD

$50,000.$ It distributed two dividends, each for CAD $7,400$ with one dividend declared on March $1$ and the other on October $1.$ Applicable

U$.$S$.$ dollar $($$$)$ exchange rates for $1$ Canadian dollar follow:

Required:

a$.$ Assume that the Canadian dollar is this subsidiary's functional currency. What translation adjustment would the company report for

the year $2024?$

b$.$ Assume that on October $1,2024,$ Stilton entered into a forward exchange contract to hedge the net investment in this subsidiary. On

that date, the company agreed to sell CAD $235,000$ in three months at a forward exchange rate of $$0\mathrm{.}78/$CAD $1.$ Prepare the journal

entries required by this forward contract.

c$.$ Compute the net translation adjustment the company will report in accumulated other comprehensive income for the year $2024$

under this second set of circumstances.

Complete this question by entering your answers in the tabs below.

Required $A$

Assume that the Canadian dollar is this subsidiary's functional currency. What translation adjustment would the company

report for the year $2024?$