Accounting

Crete Ltd. is a foreign subsidiary of a Canadian parent and is located in the country of Halobas The SFP accounts of Crete are as follows, stated in Canadian dollar (CS): Cash CS 40,000 Accounts receivable 20,000 Inventory (at market) 120,000 Capital assets 400,000 Accumulated depreciation (160,000) Long-term note receivable 1131.900 Total assets CW Accounts and notes payable 80,000 Bonds payable 300,000 Common shares 140,000 Total liabilities and equities CW Additional Information I. Crete Ltd. is wholly owned by Galan Corp. Galan established Crete when the hat was worth Sl. l0. 2. The capital assets were purchased when the hat was worth $1.30. 3. The bonds payable were issued when the hat was worth $1.25. 4. The long-term note receivable arose when the hat was worth $l.40. S. The inventory was purchased when the hat was worth $1.50. 6. The current exchange rate for the hat is $1.60. Required a. Translate the SFP accounts of Crete Ltd. into Canadian dollars, using each of the following methods: i. current-rate; and ii. temporal. in each case, treat the translation gain or loss as a single, balancing gure. b. For each method, calculate the: i. accounting exposure; and ii. additional gain or loss that would result if the exchange rate one year hence were 1.85, assuming no change in the SFP accounts in hats