Tuxedo Company (a U.S. based company) acquired 100% of a Swiss company, Roche AG, for 8.2 million Swiss francs on December 30, Year 1. At the date of acquisition, the exchange rate was $0.60 per franc. The acquisition price is attributable to the flowing assets and liabilities denominated in Swiss francs:

Cash	1,000,000		Common Stock	8,200,000
Inventory (@ cost)	2,000,000
Fixed Assets	7,000,000
Notes Payable	(1,800,000)

Tuxedo Corporate prepares consolidated financial statements on December 31, Year 1. By that date, the Swiss franc appreciated to $0.65. Because of the year-end holidays, no transactions took place between the date of acquisition and the end of the year.

Assignment:

1. Determine the translation adjustment to be reported on Tuxedos December 31, Year 1 consolidated financial statements, assuming that the Swiss franc is used to pay local wages, set sales price, and is borrowed locally. Where would the adjustment be located in the financial statements?
2. Determine the translation adjustment to be reported on Tuxedos December 31, Year 1 consolidated financial statements, assuming that the U.S. dollar is used to pay local wages, set sales price, and there is a high volume of transactions between Tuxedo and Roche. Where would the adjustment be located in the financial statements?