C3.         Assume that our company owns a subsidiary operating in Switzerland.The subsidiary has adopted the Swiss Franc (CHF) as its functionalcurrency. Our company operates this subsidiary like a division orbranch office, making all of its operating decisions, includingpricing its products. We conclude, therefore, that the functionalcurrency of this subsidiary is the $US and that its financialstatements must be remeasured prior to consolidation. Following arethe subsidiary’s financial statements (in CHF) for the most recentyear:

Income statement:
Sales	3,000,000
Cost of goods sold	-2,321,500
Gross profit	678,500
Operating expenses	-252,000
Depreciation	-225,000
Remeasurement gain or loss
Net income	201,500
Statement of retained earnings:
BOY retained earnings	1,506,500
Net income	201,500
Dividends	-75,000
Ending retained earnings	1,633,000
Balance sheet:
Assets
Cash	850,000
Accounts receivable	1,273,300
Inventory	650,000
PPE, net	927,000
Total Assets	3,700,300
Liabilities and Stockholders’ Equity
Current Liabilities	250,000
Long-term Liabilities	1,097,300
Common Stock	220,000
APIC	500,000
Retained Earnings	1,633,000
Total Liabilities & Equity	3,700,300

Our subsidiary also reports the following additional financialstatement information (in CHF):

Beginning inventory	450,000
Purchases	2,521,500
Ending inventory	-650,000
Cost of Goods Sold	2,321,500
Land	52,000
Building	750,000
Accumulated Depreciation—Building	-500,000
Equipment	1,250,000
Accumulated Depreciation—Equipment	-625,000
PPE, net	927,000
Depreciation expense—Building	100,000
Depreciation expense—Equipment	125,000
Depreciation expense	225,000

The relevant exchange rates for the $US value of the Swiss Franc(CHF) are as follows:

BOY Rate	$0.60
EOY rate	$0.80
Avg. rate	$0.70
Dividend rate	$0.77
Historical rates:
Beginning inventory	$0.60
Land	$0.35
Building	$0.35
Equipment	$0.45
Historical rate (Common Stock and APIC)	$0.20

Required: Remeasure the subsidiary’s income statement,statement of retained earnings, and balance sheet into $US for thecurrent year (assume that the BOY Retained Earnings is$1,100,000).