Wilson Inc. has a subsidiary, which is wholly owned, in Australia that previously had been determined as having the Australian dollar as its functional currency. Due to a recent restructuring, Wilson Inc.'s CFO believes that the functional currency of the Australian company has changed to the U.S. dollar. A large cumulative translation adjustment related to the Australian subsidiary is included in Accumulated Other Comprehensive Income on Wilson Inc.'s balance sheet. The CFO is unsure whether the cumulative translation adjustment should be removed from equity, and if so, to what other account it should be transferred. He also questions whether the change in functional currency qualifies as a change in accounting principle, which would require retrospective application of the temporal method in translating the Australian subsidiary's financial statements. He wonders, for example, whether the Australian subsidiary's nonmonetary assets need to be restated as if the temporal method had been applied in previous years.

Required

Search current U.S. authoritative accounting literature for guidance on how to handle a change in functional currency from a foreign currency to the U.S. dollar. Summarize that guidance to answer the CFO's questions. Identify the source of guidance for answering these questions.