(Solution) - Arte Fabrics Ltd owns a subsidiary based in France Requirements 1 Translate -(2025 Original AI-Free Solution)

Paper Details

Arte Fabrics Ltd. owns a subsidiary based in France.
Requirements
1. Translate the foreign-currency balance sheet of the French subsidiary of Arte Fabrics Ltd. into dollars. When Arte Fabrics acquired this subsidiary, the euro was worth $1.60. The current exchange rate is $1.80 per euro. During the period when the subsidiary earned its income, the average exchange rate was $1.70 per euro.
Euros
Assets .......................................................................................... 3,000,000
Liabilities ..................................................................................... 1,000,000
Shareholders' equity:
Common shares ....................................................................... 300,000
Retained earnings .................................................................... 1,700,000
3,000,000
Before you perform the foreign-currency translation calculation, indicate whether Arte Fabrics has experienced a positive or a negative foreign-currency translation adjustment. State whether the adjustment is a gain or a loss, and show where it is reported in the financial statements.
2. To which company does the translation adjustment "belong"? In which company's financial statements will the translation adjustment be reported?