Translation of financial statements Assume that your company owns a subsidiary operating in Brazil. The subsidiary maintains its books in the Brazilian real (BRL) as its functional currency. The subsidiarys financial statements (in BRL) for the most recent year:

	(in BRL)			(in BRL)			(in BRL)
Income Statement:			Balance Sheet:			Statement of Cash Flows:
Sales	3,750,000		Assets			Net Income	525,000
Cost of Goods Sold	(2,250,000)		Cash	1,067,250		Change in accounts receivable	(145,000)
Gross profit	1,500,000		Accounts receivable	870,000		Change in inventories	(186,250)
Operating expenses	(975,000)		Inventory	1,117,500		Change in current liabilities	106,000
Net income	525,000		Property, plant, and			Net cash from operating activities	299,750
			equipment (PPE), net	2,067,000
			Total assets	5,121,750
Statement of retained earnings:						Change in PPE, net	(192,000)
BOY ret. earnings	1,968,750		Liabilities and stockholders equity			Net cash from investing activities	(192,000)
Net income	525,000		Curr. liabilities	636,000
Dividends	(52,500)		L-T liabilities	1,482,000		Change in long-term debt	247,000
EOY ret. earnings	2,441,250		Common stock	250,000		Dividends	(52,500)
			APIC	312,500		Net cash from financing activities	194,500
			Ret. earnings	2,441,250
			Total liabilities and equity	5,121,750		Net change in cash	302,250
						Beginning cash	765,000
						Ending cash	1,067,250

The relevant exchange rates for the $US value of the Brazilian real (R$) are as follows:

BOY rate	$0.22
EOY rate	$0.29
Avg. rate	$0.25
PPE purchase date rate	$0.26
LTD borrowing date rate	$0.26
Dividend rate	$0.27
Historical rate (common stock and APIC)	$0.10

For both parts a. and b. below, use a negative sign with answers to indicate a reduction.

b. Compute the ending Cumulative Translation Adjustment directly, assuming a BOY balance of $(1,037,185).

Round answers to the nearest dollar.

Direct computation of translation adjustment:
AnswerBOY cumulative translation adjustmentBOY net assets x (EOY - BOY exchange rates)BOY net assets x BOY exchange rateNet income x (EOY - Average exchange rate)Net income x average exchange rateDividends x (EOY - Dividend exchange rate)Dividends x dividend exchange rateEOY net assets x EOY exchange rateEOY cumulative translation adjustmentTranslation adjustment for the year	$Answer
Net income x (EOY - Average exchange rate)	Answer
AnswerBOY cumulative translation adjustmentBOY net assets x (EOY - BOY exchange rates)BOY net assets x BOY exchange rateNet income x (EOY - Average exchange rate)Net income x average exchange rateDividends x (EOY - Dividend exchange rate)Dividends x dividend exchange rateEOY net assets x EOY exchange rateEOY cumulative translation adjustmentTranslation adjustment for the year	Answer
	Answer
AnswerBOY cumulative translation adjustmentBOY net assets x (EOY - BOY exchange rates)BOY net assets x BOY exchange rateNet income x (EOY - Average exchange rate)Net income x average exchange rateDividends x (EOY - Dividend exchange rate)Dividends x dividend exchange rateEOY net assets x EOY exchange rateEOY cumulative translation adjustmentTranslation adjustment for the year	Answer
EOY cumulative translation adjustment	$Answer