A US Company Has a Subsidiary in Brazil Required
A

A U.S. company has a subsidiary in Brazil. The subsidiary's beginning and ending trial balances for 2020 are as follows, reported in the Brazilian currency, the real (R):
$$\begin{array}{l}\begin{array} { | l | c | c | } \hline & \begin{array} { c } \text { January 1, 2020 } \\\text { Dr (Cr) }\end{array} & \begin{array} { c } \text { December 31, 2020 } \\\text { Dr (Cr) }\end{array} \\\hline \text { Cash } & \mathrm { R } \quad400,000 & \mathrm { R } \quad410,000 \\\hline \text { Fixed assets, net } & 1,800,000 & 2,100,000 \\\hline \text { Liabilities } & ( 2,000,000 ) & ( 2,210,000 ) \\\hline \text { Capital stock } & ( 230,000 ) & ( 230,000 ) \\\hline \text { Retained earnings, beginning } & 30,000 & 30,000 \\\hline \text { Sales } & & ( 3,100,000 ) \\\hline \text { Depreciation expense } & \underline { \quad } & \underline { 2,700,000 } \\\hline \text { Other expenses } & \underline { \mathrm { R } }\quad0 &\underline { \mathrm { R } }\quad0 \\\hline\end{array}\\\\\text { Exchange rates are as follows (\$/R): }\\\begin{array} { l r } \text { January 1, 2020 } & \$ 0.30 \\\text { Average for 2020 } & 0.29 \\\text { December 31, 2020 } & 0.27\end{array}\end{array}$$ Required
a. Assume the subsidiary's functional currency is the real. Calculate the translation gain or loss, appearing as a component of 2020 translated other comprehensive income.
b. Assume the subsidiary's functional currency is the U.S. dollar. Sales and out-of-pocket expenses were incurred evenly throughout the year. Fixed asset purchases for the year occurred when the exchange rate was $0.28.