The Thode Company established a wholly-owned subsidiary in Saudi Arabia on January 1, 2016, when the exchange rate was $0.30/riyal (SAR). Of Thodes initial SAR160,000,000 investment, SAR80,000,000 was used to acquire plant assets (ten-year life) and SAR40,000,000 was used to acquire inventory. The remaining amount was initially held as cash by the subsidiary. During 2016, the subsidiary reported net income of SAR16,000,000. Inventory purchases of SAR12,000,000 were made evenly during the year. It paid dividends of SAR8,000,000 on September 30, when the exchange rate was $0.255/SAR. No other transactions occurred between the subsidiary and the parent. The subsidiary's condensed income statement appears below: Sales SAR68,000,000 Cost of goods sold (32,000,000)* Depreciation expense (8,000,000)** Other cash expenses (12,000,000) Net income SAR16,000,000 *Assume a FIFO inventory flow assumption. **Relates solely to plant assets acquired on January 1, 2016. The average rate during the year was $0.265/SAR. On the balance sheet date, it was $0.25/SAR.

(a) Assuming the functional currency is the riyal, translate the branch's 2016 income statement and December 31, 2016, balance sheet into dollars and prepare an analysis of the subsidiary's translation gain or loss for 2016.

(b) Repeat the requirements of part a, assuming the subsidiary's functional currency is the U.S. dollar.