Tampa Education Center Corporation was created as a wholly owned subsidiary of Saint Leo Corporation (a U.S.-based company) on January 1, Year 1. On that date, Saint Leo Corporation invested $42,000 in Tampa Education Center Corporation’s capital stock. Given the exchange rate on that date of $0.84 per cruzeiro, the initial investment of $42,000 was converted into 50,000 cruzeiros (Cz). Other than the capital investment on January 1, there were no transactions involving stockholders’ equity in Year 1. Tampa Education Center Corporation’s cruzeiro-denominated financial statements for Year 2 are as follows:
The cruzeiro is the primary currency that Tampa Education Center Corporation uses in its day-to-day operations. The cruzeiro has steadily fallen in value against the dollar since Saint Leo Corporation made the investment in Tampa Education Center Corporation on January 1, Year 1. Relevant U.S. dollar ($) exchange rates for the cruzeiro for Years 1 and 2 are as follows:
Required: Use a new sheet to complete each requirement below. 1-Translate Tampa Education Center Corporation’s Year 2 financial statements into U.S. dollars. 2- Compute the translation adjustment for Year 1 and for Year 2 and reconcile these amounts to the cumulative translation adjustment reported on the translated balance sheet at December 31, Year 2.

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