Type New Mack fice sheet at December 31, Year 2. 17. Brookhurst Company (a U.S.-based company) established a subsidiary in South Africa on January 1, Year 1, by investing 300,000 South African rand (ZAR) when the exchange rate was US$0.09/ZAR 1. On that date, the foreign subsidiary borrowed ZAR 500,000 from local banks on a 10-year note to finance the acquisition of plant and equipment. The subsidiary's opening balance sheet (in ZAR) was as follows: Balance Sheet January 1, Year 1 Cash 300,000 Long-term debt 500,000 Plant and equipment 500,000 Capital stock 300,000 Total 800,000 Total 800,000 Page 321 During Year 1, the foreign subsidiary generated sales of ZAR 1,000,000 and net income of ZAR 110,000. Dividends in the amount of ZAR 20,000 were paid to the parent on June 1 and December 1. Inventory was acquired evenly throughout the year, " with ending inventory acquired on November 15, Year 1. The subsidiary's ZAR financial statements for the year ended December 31, Year 1, are as follows: Income Statement Year 1 ZAR Sales 1,000,000 Cost of goods sold (600,000) Gross profit 400,000 Depreciation expense Other operating expenses (150,000) (50,000) Income Statement Year 1 ZAR Sales 1,000,000 Cost of goods sold (600,000) Gross profit 400,000 Depreciation expense (50,000) Other operating expenses (150,000) Income before tax 200,000 Income taxes (90,000) Net income 110,000 Statement of Retained Earnings Year 1 ZAR Retained earnings, 1/1/Y1 0 Net income 110,000 Dividends (40,000) Retained earnings, 12/31/Y1 70,000 Balance Sheet December 31, Year 1 Balance Sheet December 31, Year 1 ZAR Cash 80,000 Receivables 150,000 Inventory 270,000 Plant and equipment (net) 450,000 Total assets 950,000 Accounts payable 80,000 Long-term debt 500,000 Common stock 300,000 Retained earnings, 12/31/Y1 Total liabilities and stockholders' equity Relevant exchange rates for Year 1 are as follows (US$ per ZAR): 70,000 950,000 January 1, Year 1 June 1, Year 1 Average for Year 1 $ 0.090 0.095 0.096 November 15, Year 1 0.100 December 1, Year 1 0.105 December 31, Year 1 0.110 L C E N2F2%5Bdata-uuid-96cbbf4461 Relevant exchange rates for Year 1 are as follows (US$ per ZAR): January 1, Year 1 June 1, Year I Average for Year 1 November 15, Year 1 December 1, Year 1 December 31, Year 1 $ 0.090 0.095 0.096 0.100 0.105 0.110 2120%56data uuid-53935546de40bcb1551 Required: a. Translate the South African subsidiary's financial statements into U.S. dollars, assuming that the South African rand is the functional currency. Compute the translation adjustment by considering the impact of exchange rate changes on the subsidiary's net assets. Page 3221 b. Translate (remeasure) the South African subsidiary's financial statements into U.S. dollars, assuming that the U.S. dollar is the functional currency. Compute the translation adjustment (remeasurement gain or loss) by considering the impact of exchange rate changes on the subsidiary's net monetary asset or liability position