11.8: Bangkok Instruments, Ltd. (A). Bangkok Instruments, Ltd., the Thai subsidiary of a U.S. corporation, is a seismic instrument manufacturer. Bangkok Instruments manufactures the instruments primarily for the oil and gas industry globally, though with recent commodity price increases of all kinds, including copper, its business has begun to grow rapidly. Sales are primarily to multinational companies based in the U.S. and Europe. Bangkok Instruments balance sheet in thousands of Thai bahts (B) as of March 31 is as follows:

Bangkok Instruments, Ltd.Balance Sheet, March 1, thousands of Thai bahts

Assets:

Cash B 24,000

Accounts receivable 36,000

Inventory 48,000

Net Plant & Equipment 60,000

B 168,000

Liabilities and Net Worth:

Accounts payable B 18,000

Bank loans 60,000

Common stock 18,000

Retained earnings 72,000

B 168.000

Exchange rates for translating Bangkok Instruments balance sheet into U.S. dollars are:

B 40,00 = $1 : April 1 exchange rate after 25% devaluation

B 30.00 = $1,00: March 31 exchange rate, before 25% devaluation. All inventory was acquired at this rate.

B 20.00 = $1.00: Historic exchange rate at which plant and equipment were acquired.

Use the Exchange rates given in the problem for translating Bangkok Instruments balance sheet into U.S. dollars from Baht. Use both the Current and temporal method. Do the problem again using the exchange given in the problem.

11.9: Bangkok Instruments, Ltd. (B). Using the original data provided for Bangkok Instruments, assume that the Thai baht appreciated in value from B30.00 = $1.00 to B25 = $1.00 between March 31 and April 1. Assuming no change in balance sheet accounts between those two days, calculate the gain or loss from translation by both the current rate method and the temporal method. Explain the translation gain or loss in terms of changes in the value of exposed accounts. Use the Exchange rates given in the problem for translating Bangkok Instruments balance sheet into U.S. dollars from Baht. Use both the Current and temporal method. Also, do the problem again using the exchange given in the problem.