Ganado Europe (A). Using facts in the chapter for Ganado Europe, assume the exchange rate on January 2, 2016, in Exhibit 11.5 dropped in value from $1.1500/ to $0.9900/. Recalculate Ganado Europe's translated balance sheet for January 2, 2016, with the new exchange rate using the current rate method as shown in the popup window, a. What is the amount of translation gain or loss? b. Where should it appear in the financial statements? i Data Table - X a. 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.) b. Where should it appear in the financial statements? (Select the best choice below.) O A. The translation gain (loss) for the year is added to the balance in the Cumulative Translation Adjustment (CTA) account. OB. The translation gain (loss) for the year is added to the balance in the Total Assets account OC. The translation gain (loss) for the year is added to the balance in the Total Liabilities and Net Worth account. OD. The translation gain (loss) for the year is added to the balance in the Retained Earnings account. EXHIBIT 11.5 Ganado Europe's Translation Loss After Depreciation of the Euro: Current Rate Method December 31, 2015 January 2, 2016 Exchange Rate Translated Exchange Rate Translated Assets In Euros () (US$leuro) Accounts (USS) (US$leuro) Accounts (USS) Cash 1,300,000 1.1500 $1,495,000 0.9900 $1,287,000 Accounts receivable 3,200,000 1.1500 3,680,000 0.9900 3,168,000 Inventory 2,300,000 1.1500 2,645,000 0.9900 2,277,000 Net plant and equipment 5,400,000 1.1500 6,210,000 0.9900 5,346,000 Total 12,200,000 $14,030,000 $12,078,000 Liabilities and Net Worth Accounts payable 600,000 1.1500 $690,000 0.9900 $594,000 Short-term bank debt 1,000,000 1.1500 1,150,000 0.9900 990,000 Long-term debt 1,700,000 1.1500 1,955,000 0.9900 1,683,000 Common stock 1,800,000 1.2040 2,167,200 1.2040 2,167,200 Retained earnings 7,100,000 1.1500 (a) 8,165,000 1.1500 (b) 8,165,000 Translation adjustment (CTA) (97,200 (1,521,200) 12,200,000 $14,030,000 $12,078,000 (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 euro. Total Click on the icon located on the top-right corner of the data table in order to copy its contents into a spreadsheet. [Print [Done]
