E7.5 Translation and Remeasurement Gains and Losses Amcrest France Sarl, located in Paris, France, is a financial subsidiary of Target Corporation, a U.S. company. Amcrest's accounts are re- ported in euros. Assume that the following data relate to Amcrest's activities for 2020 (in millions). (15,000) 5,400 Net monetary liabilities, beginning of year Net assets, beginning of year. Transactions during 2020: Sales.. Inventory purchases. Depreciation and amortization Cost of sales.. Cash operating expenses. Dividends declared and paid.. New long-term interest borrowings. 72,000 59,000 1,000 61,000 9,500 100 300 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 Sales, inventory purchases, and cash operating expenses were reported evenly throughout the year. Exchange rates are as follows ($/): Beginning of 2020. Average for 2020 End of 2020.. Rate when assets related to depreciation and amortization were acquired Rate when dividends declared.. Rate when long-term interest borrowings occurred $1.30 1.24 1.20 1.45 1.21 1.25 Required a. Prepare a schedule to compute Amcrest's 2020 remeasurement gain or loss, assuming Amcrest's functional currency is the U.S. dollar. b. Prepare a schedule to compute Amcrest's 2020 translation gain or loss, assuming Amcrest's func- tional currency is the euro. 4 Problem: E7.5 Focus: Translation and Remeasurement Gains and Losses a. Compute Amcrest's 2020 remeasurement gain or loss, assuming Amcrest's functional currency is the U.S. dollar. (in thousands) 2020 beginning exposed position Sales Purchase Cash Operating Expenses Dividends ( 15,000) 72,000 (59,000) (9,500) (100) 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 $1 $ 1.300 $ (19,500) 1.240 $ 89,280 1.240 $ (73,160) 1.240 $ (11,780) 1.210 $ (121) (15,281) 1.200 (13,920) $ (1,361) Please Retry! 2020 ending exposed position 2020 remeasurement (gain) loss ( 11,600) b. Compute Amcrest's 2020 translation gain or loss, assuming Amcrest's functional currency is the euro. (in thousands) 5,400 $ 7,020 $ $1 1.300 1.240 1.210 2020 beginning exposed position Net Income Dividends (100) (121) 6,899 1.200 2020 ending exposed position 2020 translation loss 6,899 Please Retry! E7.5 Translation and Remeasurement Gains and Losses Amcrest France Sarl, located in Paris, France, is a financial subsidiary of Target Corporation, a U.S. company. Amcrest's accounts are re- ported in euros. Assume that the following data relate to Amcrest's activities for 2020 (in millions). (15,000) 5,400 Net monetary liabilities, beginning of year Net assets, beginning of year. Transactions during 2020: Sales.. Inventory purchases. Depreciation and amortization Cost of sales.. Cash operating expenses. Dividends declared and paid.. New long-term interest borrowings. 72,000 59,000 1,000 61,000 9,500 100 300 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 Sales, inventory purchases, and cash operating expenses were reported evenly throughout the year. Exchange rates are as follows ($/): Beginning of 2020. Average for 2020 End of 2020.. Rate when assets related to depreciation and amortization were acquired Rate when dividends declared.. Rate when long-term interest borrowings occurred $1.30 1.24 1.20 1.45 1.21 1.25 Required a. Prepare a schedule to compute Amcrest's 2020 remeasurement gain or loss, assuming Amcrest's functional currency is the U.S. dollar. b. Prepare a schedule to compute Amcrest's 2020 translation gain or loss, assuming Amcrest's func- tional currency is the euro. 4 Problem: E7.5 Focus: Translation and Remeasurement Gains and Losses a. Compute Amcrest's 2020 remeasurement gain or loss, assuming Amcrest's functional currency is the U.S. dollar. (in thousands) 2020 beginning exposed position Sales Purchase Cash Operating Expenses Dividends ( 15,000) 72,000 (59,000) (9,500) (100) 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 $1 $ 1.300 $ (19,500) 1.240 $ 89,280 1.240 $ (73,160) 1.240 $ (11,780) 1.210 $ (121) (15,281) 1.200 (13,920) $ (1,361) Please Retry! 2020 ending exposed position 2020 remeasurement (gain) loss ( 11,600) b. Compute Amcrest's 2020 translation gain or loss, assuming Amcrest's functional currency is the euro. (in thousands) 5,400 $ 7,020 $ $1 1.300 1.240 1.210 2020 beginning exposed position Net Income Dividends (100) (121) 6,899 1.200 2020 ending exposed position 2020 translation loss 6,899 Please Retry
