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 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 United States and Europe. Bangkok Instruments' balance sheet in thousands of Thai bahts (B) as of March 31 is shown in the popup window:

Exchange rates for translating Bangkok Instruments' balance sheet into U.S. dollars are: B41.33/$ April 1 exchange rate, after 25% devaluation. B31.00/$ March 31 exchange rate, before 25% devaluation. All inventory was acquired at this rate. B22.00/$ Historic exchange rate at which plant and equipment were acquired.

The Thai baht dropped in value from B31.00/$ to B41.33/$ between March 31 and April 1. Assuming no change in balance sheet accounts between these two days, calculate the gain or loss from translation by both the current rate method and the temporal method. Bangkok Instruments' translated balance sheet using the current rate method is shown here,

and the one using the temporal method is shown here,

Explain the translation gain or loss in terms of changes in the value of exposed accounts.

Assets Cash Accounts receivable Inventory Net plant & equipment Bangkok Instruments, Ltd. Balance Sheet, March 1 Liabilities & Net Worth B22,000,000 Accounts payable B20,000,000 37,000,000 Bank loans 62,000,000 48,000,000 Common stock 20,000,000 62,000,000 Retained earnings 67,000,000 B169,000,000 B169,000,000 Bangkok Instruments' Translation Gain (Loss) After Depreciation of the Baht: Current Rate Method 41.33 March 31 April1 Exchange Translated Exchange Translated Assets In Bahts (B) Rate (B/$) Accounts ($) Rate (B/$) Accounts ($) Cash B22,000,000 31.00 $709,677 41.33 $532,301 Accounts receivable 37,000,000 31.00 1,193,548 41.33 895,233 Inventory 48,000,000 31.00 1,548,387 1,161,384 Net plant and equipment 62,000,000 31.00 2,000,000 41.33 1,500,121 Total B169,000,000 $5,451,612 $4,089,039 Liabilities and Net Worth Accounts payable B20,000,000 31.00 $645,161 41.33 $483,910 Bank loans 62,000,000 31.00 2,000,000 41.33 1,500,121 Common stock 20,000,000 22.00 909,091 22.00 909,091 Retained earnings 67,000,000 35.31 (a) 1,897,360 35.31 (b) 1,897,360 Translation adjustment (CTA) Total B169,000,000 $5,451,612 $4,089,039 (a) Dollar retained earnings before depreciation are the cumulative sum of additions to retained earnings of all prior years, translated to exchange rates in each year. (b) Translated into dollars at the same rate as before depreciation of the baht. Bangkok Instruments' Translation Gain (Loss) After Depreciation of the Baht: Temporal Method March 31 April1 Exchange Translated Exchange Translated Assets In Bahts (B) Rate (B/S) Accounts ($) Rate (B/S) Accounts ($) Cash B22,000,000 31.00 $709,677 41.33 $532,301 Accounts receivable 37,000,000 31.00 1,193,548 41.33 895,233 Inventory 48,000,000 31.00 1,548,387 31.00 1,548,387 Net plant and equipment 62,000,000 22.00 2.818,182 22.00 2,818,182 Total B169,000,000 $6,269,794 $5,794,103 Liabilities and Net Worth Accounts payable B20,000,000 31.00 $645,161 41.33 $483,910 Bank loans 62,000,000 31.00 2,000,000 41.33 1,500,121 Common stock 20,000,000 22.00 909,091 22.00 909,091 Retained earnings 67,000,000 24.67 (a) 2,715,542 24.67 (b) 2,715,542 Translation gain (loss) Total B169,000,000 $6,269,794 $5,794,103 (a) Dollar retained earnings before depreciation are the cumulative sum of additions to retained earnings of all prior years, translated to exchange rates in each year. (b) Translated into dollars at the same rate as before depreciation of the baht. (c) Under the temporal method, the translation gain (loss) would be closed into retained earnings through the income statement rather than left as a separate line item as shown here. (c) Using the translated balance sheet under the current rate method, what is the amount of translation gain or loss? Enter a positive number for a gain and negative for a loss. $1 (Round to the nearest dollar.) Bangkok Instruments' Translation Gain (Loss) After Depreciation of the Baht: Current Rate Method March 31 April1 Exchange Translated Exchange Translated Assets In Bahts (B) Rate (B/S) Accounts ($) Rate (B/S) Accounts ($) Cash B22,000,000 31.00 $709,677 41.33 $532,301 Accounts receivable 37,000,000 31.00 1,193,548 41.33 895,233 Inventory 48,000,000 31.00 1,548,387 41.33 1,161,384 Net plant and equipment 62,000,000 31.00 2,000,000 41.33 1,500,121 Total B169,000,000 $5,451,612 $4,089,039 Liabilities and Net Worth Accounts payable B20,000,000 31.00 $645,161 41.33 $483,910 Bank loans 62,000,000 31.00 2,000,000 41.33 1,500,121 Common stock 20,000,000 22.00 909,091 22.00 909,091 Retained earnings 67,000,000 35.31 (a) 1,897,360 35.31 (b) 1,897,360 Translation adjustment (CTA) Total B169,000,000 $5,451,612 $4,089,039 (a) Dollar retained earnings before depreciation are the cumulative sum of additions to retained earnings of all prior years, translated to exchange rates in each year. (b) Translated into dollars at the same rate as before depreciation of the baht. Using the translated balance sheet under the temporal method, E, what is the amount of translation gain or loss? Enter a positive number for a gain and negative for a loss. $ (Round to the nearest dollar.) The results in a translation gain, as opposed to the CTA loss found under the because all assets are exposed under that method, whereas the , because of the different exchange rates used against net plant and equipment and the inventory line items. This gain would be carries net plant and equipment and inventory at relevant historical exchange rates. (Select from the drop-down menus.) impossible under the Bangkok Instruments' Translation Gain (Loss) After Depreciation of the Baht: Temporal Method March 31 April 1 Exchange Translated Exchange Translated Assets In Bahts (B) Rate (B/S) Accounts ($) Rate (B/S) Accounts ($) Cash B22,000,000 31.00 $709,677 41.33 $532,301 Accounts receivable 37,000,000 31.00 1,193,548 41.33 895,233 Inventory 48,000,000 31.00 1,548,387 31.00 1,548,387 Net plant and equipment 62,000,000 22.00 2,818,182 22.00 2,818,182 Total B169,000,000 $6,269,794 $5,794,103 Liabilities and Net Worth Accounts payable B20,000,000 31.00 $645,161 41.33 $483,910 Bank loans 62,000,000 31.00 2,000,000 41.33 1,500,121 Common stock 20,000,000 22.00 909,091 22.00 909,091 Retained earnings 67,000,000 24.67 (a) 2,715,542 24.67 (b) 2,715,542 Translation gain (loss) Total B169.000.000 $6,269,794 $5,794,103 (a) Dollar retained earnings before depreciation are the cumulative sum of additions to retained earnings of all prior years, translated to exchange rates in each year. (b) Translated into dollars at the same rate as before depreciation of the baht. (c) Under the temporal method, the translation gain (loss) would be closed into retained earnings through the income statement rather than left as a separate line item as shown here. Assets Cash Accounts receivable Inventory Net plant & equipment Bangkok Instruments, Ltd. Balance Sheet, March 1 Liabilities & Net Worth B22,000,000 Accounts payable B20,000,000 37,000,000 Bank loans 62,000,000 48,000,000 Common stock 20,000,000 62,000,000 Retained earnings 67,000,000 B169,000,000 B169,000,000 Bangkok Instruments' Translation Gain (Loss) After Depreciation of the Baht: Current Rate Method 41.33 March 31 April1 Exchange Translated Exchange Translated Assets In Bahts (B) Rate (B/$) Accounts ($) Rate (B/$) Accounts ($) Cash B22,000,000 31.00 $709,677 41.33 $532,301 Accounts receivable 37,000,000 31.00 1,193,548 41.33 895,233 Inventory 48,000,000 31.00 1,548,387 1,161,384 Net plant and equipment 62,000,000 31.00 2,000,000 41.33 1,500,121 Total B169,000,000 $5,451,612 $4,089,039 Liabilities and Net Worth Accounts payable B20,000,000 31.00 $645,161 41.33 $483,910 Bank loans 62,000,000 31.00 2,000,000 41.33 1,500,121 Common stock 20,000,000 22.00 909,091 22.00 909,091 Retained earnings 67,000,000 35.31 (a) 1,897,360 35.31 (b) 1,897,360 Translation adjustment (CTA) Total B169,000,000 $5,451,612 $4,089,039 (a) Dollar retained earnings before depreciation are the cumulative sum of additions to retained earnings of all prior years, translated to exchange rates in each year. (b) Translated into dollars at the same rate as before depreciation of the baht. Bangkok Instruments' Translation Gain (Loss) After Depreciation of the Baht: Temporal Method March 31 April1 Exchange Translated Exchange Translated Assets In Bahts (B) Rate (B/S) Accounts ($) Rate (B/S) Accounts ($) Cash B22,000,000 31.00 $709,677 41.33 $532,301 Accounts receivable 37,000,000 31.00 1,193,548 41.33 895,233 Inventory 48,000,000 31.00 1,548,387 31.00 1,548,387 Net plant and equipment 62,000,000 22.00 2.818,182 22.00 2,818,182 Total B169,000,000 $6,269,794 $5,794,103 Liabilities and Net Worth Accounts payable B20,000,000 31.00 $645,161 41.33 $483,910 Bank loans 62,000,000 31.00 2,000,000 41.33 1,500,121 Common stock 20,000,000 22.00 909,091 22.00 909,091 Retained earnings 67,000,000 24.67 (a) 2,715,542 24.67 (b) 2,715,542 Translation gain (loss) Total B169,000,000 $6,269,794 $5,794,103 (a) Dollar retained earnings before depreciation are the cumulative sum of additions to retained earnings of all prior years, translated to exchange rates in each year. (b) Translated into dollars at the same rate as before depreciation of the baht. (c) Under the temporal method, the translation gain (loss) would be closed into retained earnings through the income statement rather than left as a separate line item as shown here. (c) Using the translated balance sheet under the current rate method, what is the amount of translation gain or loss? Enter a positive number for a gain and negative for a loss. $1 (Round to the nearest dollar.) Bangkok Instruments' Translation Gain (Loss) After Depreciation of the Baht: Current Rate Method March 31 April1 Exchange Translated Exchange Translated Assets In Bahts (B) Rate (B/S) Accounts ($) Rate (B/S) Accounts ($) Cash B22,000,000 31.00 $709,677 41.33 $532,301 Accounts receivable 37,000,000 31.00 1,193,548 41.33 895,233 Inventory 48,000,000 31.00 1,548,387 41.33 1,161,384 Net plant and equipment 62,000,000 31.00 2,000,000 41.33 1,500,121 Total B169,000,000 $5,451,612 $4,089,039 Liabilities and Net Worth Accounts payable B20,000,000 31.00 $645,161 41.33 $483,910 Bank loans 62,000,000 31.00 2,000,000 41.33 1,500,121 Common stock 20,000,000 22.00 909,091 22.00 909,091 Retained earnings 67,000,000 35.31 (a) 1,897,360 35.31 (b) 1,897,360 Translation adjustment (CTA) Total B169,000,000 $5,451,612 $4,089,039 (a) Dollar retained earnings before depreciation are the cumulative sum of additions to retained earnings of all prior years, translated to exchange rates in each year. (b) Translated into dollars at the same rate as before depreciation of the baht. Using the translated balance sheet under the temporal method, E, what is the amount of translation gain or loss? Enter a positive number for a gain and negative for a loss. $ (Round to the nearest dollar.) The results in a translation gain, as opposed to the CTA loss found under the because all assets are exposed under that method, whereas the , because of the different exchange rates used against net plant and equipment and the inventory line items. This gain would be carries net plant and equipment and inventory at relevant historical exchange rates. (Select from the drop-down menus.) impossible under the Bangkok Instruments' Translation Gain (Loss) After Depreciation of the Baht: Temporal Method March 31 April 1 Exchange Translated Exchange Translated Assets In Bahts (B) Rate (B/S) Accounts ($) Rate (B/S) Accounts ($) Cash B22,000,000 31.00 $709,677 41.33 $532,301 Accounts receivable 37,000,000 31.00 1,193,548 41.33 895,233 Inventory 48,000,000 31.00 1,548,387 31.00 1,548,387 Net plant and equipment 62,000,000 22.00 2,818,182 22.00 2,818,182 Total B169,000,000 $6,269,794 $5,794,103 Liabilities and Net Worth Accounts payable B20,000,000 31.00 $645,161 41.33 $483,910 Bank loans 62,000,000 31.00 2,000,000 41.33 1,500,121 Common stock 20,000,000 22.00 909,091 22.00 909,091 Retained earnings 67,000,000 24.67 (a) 2,715,542 24.67 (b) 2,715,542 Translation gain (loss) Total B169.000.000 $6,269,794 $5,794,103 (a) Dollar retained earnings before depreciation are the cumulative sum of additions to retained earnings of all prior years, translated to exchange rates in each year. (b) Translated into dollars at the same rate as before depreciation of the baht. (c) Under the temporal method, the translation gain (loss) would be closed into retained earnings through the income statement rather than left as a separate line item as shown here