1. Assume that FASB 8 is still in effect instead of FASB 52. Construct a translation exposure report for Centralia Corporation and its affiliates that is the counterpart to Exhibit 10.6 in the text. Centralia and its affiliates carry inventory and fixed assets on the books at historical values.

I have found the answer on here, but I am confused as to why the Swiss Franc goes from 375 to 1,400 on notes payable. I have attached the solution below Exhibit 10.6 Can you please make sure that it is correct and then explain the notes payable? Thank you.

EXHIBIT 10.6 Translation Exposure Report for Centralia Corporation and Its Mexican and Spanish Affiliates, December 31, 2016 (in 000 currency units) Canadian Dollar Mexican Peso Euro Swiss Franc CD200 825 SF 0 Assets Cash Accounts receivable Inventory Net fixed assets Exposed assets 0 Ps 6,000 9,000 15,000 46,000 Ps 000 1,045 1,650 4,400 7,920 o lo 0 0 0 0 CD200 SF CD O 1,364 SF 0 0 935 375 Liabilities Accounts payable Notes payable Long-term debt Exposed liabilities Net exposure 0 Ps 7,000 17,000 27,000 Ps 51,000 Ps 25,000 0 CD 0 3,520 5,819 2,101 SF 375 (SF 375) CD200 Translation Exposure Report (Corp. C) for the year ending 31 December, 2008 Canadian Mexican Dollar Peso Euro Swiss Franc Particulars Assets Cash Accounts Receivables Inventory Net Fixed Assets Total Assets CAD 200 CADO CADO CADO CHF 200 MXN 6,000 825 MXN 9,000 1,045 MXN O 0 MXNO 0 CHF 15,000 CHF 1,870 CHF 0 CHF O CHFO CHF 0 CHF 0 Liabilities and Net Worth Accounts Payable Notes Payable Long-term Debt Exposed Liabilities Net Worth CADO MXN 7,000 1,364 CADO MXN 17,000 935 CADO MXN 27,000 3,520 CHF 0 CHF 51,000 CHF 5,819 CHF 200 (CHF 36,000) (CHF 3,949) CHFO CHF 1,400 CHFO CHF 1,400 (CHF 1,400) Conclusion Based on the table prepared above, the following conclusions can be derived- FASB No. 8 is negative for Mexican Peso and Euro. Whereas, as per guidelines of FASB No 52, the exposure for these currencies are positive. The exposure for Canadian Dollar and Swiss Franc is the same under both the guidelines. This means that if value of each euro depreciates when compared against each dollar, the val of assets will decrease slower when compared to fall in liabilities, which must have been vice versa. Thus the reporting currency imbalance is computed as- Net Worth in Euros Reporting Currency Imbalance = Euro Exchange Rate/$ (3,949,000) 1.1 $1.00 = $239,415