Since there is no mention of dividends being paid, the retained earnings will equal net income (RE = NI − Div). The items in the income statement are translated at the average exchange rate under SFAS 52. The average rate is (2 + 3) / 2 = 2.5 Australian dollars = $1.
Income Statement (in $)
| Sales (3,500 / 2.5) |
$1,400 |
| Costs (2,900 / 2.5) |
$1,160 |
| Net Income |
$240 |
