Perez Company, a Mexican subsidiary of a U.S. company, sold equipment costing 200,000 pesos with accumulated depreciation of 75,000 pesos for 140,000 pesos on March 1, 2009. The equipment was purchased on January 1, 2008, when the exchange rate for the peso was $.11. Relevant exchange rates for the peso are as follows:
a) The financial statements for Perez are translated by its U.S. parent. What amount of gain or loss would be reported in its translated income statement?
b) The financial statements for Perez are re-measured by its U.S. parent. What amount of gain or loss would be reported in its translated income statement?