Finlandiva, a furniture manufacturer based in Finland, is owned by U.S.-based Couch Potato, Inc. Finlandiva’s balance sheet at the current exchange rate of $1.00/€ is shown in the following table.

a. Identify Couch Potato’s exposed assets, exposed liabilities, and net exposed assets under ASC 830–30 Translation of Financial Statements.

b. Identify the impact of a 20 percent depreciation of the euro on Couch Potato’s consolidated balance sheet.  

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Value Value at Value at Translation Assets in euros $1.00/ $0.80/ gains\losses Cash & equivalents Accounts receivable Inventory 50,000 $50,000 30,000 $30,000 20,000 $20,000 Plant and equipment 900,000 $900,000 Total assets 1,000,000 $1,000,000 Liabilities Accounts payable 125,000 $125,000 Short-term debt 75,000 $75,000 Long-term debt Net worth Liabilities & net worth 1,000,000 750,000 $750,000 50,000 $50,000 1,000,000 $1,000,000