3. Nataja Mumbai Ltd. Nataja Mumbai Ltd., the Indian subsidiary of a Belgian corporation, is a cardiothoracic instruments manufacturer. Nataja manufactures the instruments primarily for the medical industry globally-though with recent advances in cardiovascular surgery, its business has begun to grow rapidly. Sales are primarily to hospitals based on Europe and Asia. Nataja Mumbai's balance sheet in thousands of Indian Rupees (INR) as of March 31 is as follows: Nataja Mumbai Ltd. Balance sheet. 31 March. thousands of Indian rupees (INR) Exchange rates for translating Nataja Mumbai's balance sheet into euros are: INR 59.39 per 31 March exchange rate, before 25% devaluation. All inventory was acquired at this rate. INR 79.19 per 1 April exchange rate, after 25% devaluation. INR 50.00 per Historical exchange rate at which plant and equipment were acquired. INR 50.00 per Historical rate for translating shareholder's equity. Using the data presented, assume that the Indian rupee dropped in value from INR 59.39 per to INR 79.19 per between 31 March and 1 April. Assuming no change in the balance sheet between these 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 change in the value of the exposed accounts. 2. Cairo Ingot, Ltd. Cairo Ingot, Ltd., is the Egyptian subsidiary of Trans-Mediterranean Aluminium, a British multinational that fashions automobile engine blocks from aluminium. Trans-Mediterranean's home reporting currency is the British pound. Cairo Ingot's December 31st balance sheet is shown below. At the date of this balance sheet the exchange rate between Egyptian pounds and British pounds sterling was E 5.50 per UKE. Cairo Ingot, Ltd. Balance sheet. 31 December. Eovtian nounds (fE) a. What is Cairo Ingot's contribution to the translation exposure of Trans-Mediterranean on 31 December, using the current rate method? b. Calculate the translation exposure loss to Trans-Mediterranean if the exchange rate at the end of the following quarter is E6.00 per UKf. Assume all balance sheet accounts are the same at the end of the quarter as they were at the beginning. 3. Nataja Mumbai Ltd. Nataja Mumbai Ltd., the Indian subsidiary of a Belgian corporation, is a cardiothoracic instruments manufacturer. Nataja manufactures the instruments primarily for the medical industry globally-though with recent advances in cardiovascular surgery, its business has begun to grow rapidly. Sales are primarily to hospitals based on Europe and Asia. Nataja Mumbai's balance sheet in thousands of Indian Rupees (INR) as of March 31 is as follows: Nataja Mumbai Ltd. Balance sheet. 31 March. thousands of Indian rupees (INR) Exchange rates for translating Nataja Mumbai's balance sheet into euros are: INR 59.39 per 31 March exchange rate, before 25% devaluation. All inventory was acquired at this rate. INR 79.19 per 1 April exchange rate, after 25% devaluation. INR 50.00 per Historical exchange rate at which plant and equipment were acquired. INR 50.00 per Historical rate for translating shareholder's equity. Using the data presented, assume that the Indian rupee dropped in value from INR 59.39 per to INR 79.19 per between 31 March and 1 April. Assuming no change in the balance sheet between these 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 change in the value of the exposed accounts. 2. Cairo Ingot, Ltd. Cairo Ingot, Ltd., is the Egyptian subsidiary of Trans-Mediterranean Aluminium, a British multinational that fashions automobile engine blocks from aluminium. Trans-Mediterranean's home reporting currency is the British pound. Cairo Ingot's December 31st balance sheet is shown below. At the date of this balance sheet the exchange rate between Egyptian pounds and British pounds sterling was E 5.50 per UKE. Cairo Ingot, Ltd. Balance sheet. 31 December. Eovtian nounds (fE) a. What is Cairo Ingot's contribution to the translation exposure of Trans-Mediterranean on 31 December, using the current rate method? b. Calculate the translation exposure loss to Trans-Mediterranean if the exchange rate at the end of the following quarter is E6.00 per UKf. Assume all balance sheet accounts are the same at the end of the quarter as they were at the beginning
