14. Translation current rate Please refer to Table 4 in the datafile. If EuroTrade applies the current rate method of translation, what will be the effect of a decrease in the EUR/USD exchange rate? (Note: gain = equity increases; loss equity decreases) = O a) translation loss Ob) no effect translation gain O d) impossible to determine EuroTrade Americas is a US subsidiary of a Dutch company. The subsidiary uses USD as functional currency and its balance sheet has to be translated into EUR every quarter. USD Assets Cash Accounts receivable Inventory Net plant & equipment Total 3 000 000 2 000 000 1 600 000 2 400 000 9 000 000 Liabilities Accounts payable Short-term bank debt Long-term debt Common stock Total 900 000 1 800 000 2 300 000 4 000 000 9 000 000