Ganado Europe (B). Using facts in the chapter for Ganado Europe, assume that the exchange rate on January 2, 2016, in Exhibit 11.6 dropped in value from $1.1700/ to $0 9700/e. Recalculate Ganado Europe's translated balance sheet for January 2, 2016, with the new exchange rate using the temporal 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? c. Why does the translation loss or gain under the temporal method differ from the loss or gain under the current rate method? 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) to 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 Retained Earnings account OB. The translation gain (loss) for the year is added to the balance in the Total Liabilities and Net Worth account. OC. The translation gain (loss) for the year is added to the balance in the Total Assets account OD. The translation gain (loss) for the year is added to the balance in the Cumulative Translation Adjustment (CTA) account Click to select your answers) This course (GBMT 1010. Summer 2020) is based on Moffert Storen Elternar Fundamentals of Multinational Force 6 - brary c. Why does the translation loss or gain under the tomporal method differ from the form or gain under the current rate method? (Select the best choice below) OA. The exposed assets under the current rate method are larger than under the temporal mothed by the amount of inventory and net plant and equipment OB. The exposed assets under the current rate method are larger than under the temporal method by the amount of accounts payable and common stock OC. The exposed assets under the current rate method are larger than under the temporal method by the amount of cash and accounts receivable OD. The exposed assets under the current rate method are larger than under the temporal method by the amount of short-term bank debt and long-term debt kulator Surces Click to select your answers) Data Table EXHIBIT 11.6 Ganado Europe's Translation Loss After Depreciation of the Euro: Temporal Method December 31, 2015 January 2, 2016 Exchange Rate Translated Exchange Rate Translated Assets In Euros () (USS/euro) Accounts (USS) (US$leuro) Accounts (USS) Cash 1,900,000 1.1700 $2,223,000 0.9700 $1,843,000 Accounts receivable 2,800,000 1.1700 3,276,000 0.9700 2.716,000 Inventory 2,500,000 1.1880 2.970,000 1.1880 2.970,000 Net plant and equipment 5,500,000 1.2490 6,869,500 1.2490 6,869,500 Total 12.700,000 $15,338,500 $14.398,500 Liabilities and Net Worth Accounts payable 800,000 1.1700 S936.000 0.9700 $776.000 Short-term bank debt 1.300.000 1.1700 1.521 000 0.9700 1.261,000 Long-term debt 1.200.000 1.1700 1.404.000 0.9700 1,164,000 Common stock 2.400.000 1.2490 2.997,600 1.2490 2.997.600 Retained earnings 7.000.000 1.2167 (a 8.479.900 1.2167 (b) 8.479.900 Print Done This course (GBMT 1010 - Summer 2020) is based on Moffert/Stonehill/Eiteman: Fundamentals of Multinational Finance, 6e o comic) Inis lest 5 pls pe Data Table - X Ganad $1.1704 shown a. Whal b. Whe c. Why . OD. Total 12,700,000 $15,338,500 $14,398,500 Liabilities and Net Worth Accounts payable 800,000 1.1700 $936,000 0.9700 5776,000 Short-term bank debt 1,300,000 1.1700 1,521,000 0.9700 1.261.000 Long-term debt 1.200 000 1.1700 1,404,000 0.9700 1.164,000 Common stock 2,400,000 1.2490 2.997,600 12490 2,997,600 Retained earnings 7,000,000 1.2167 (a) 8,479,900 1.2167 (b) 8.479,900 Translation gain (loss) (c) Total 12,700,000 $15.338.500 $14,398,500 (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. (c) Under the temporal method the translation loss would be closed into retained earnings through the income statement rather than left as a separate line item as shown here. ? c. Why . . OC. OD Click on the con located on the top right comer of the data table in order to copy its contents into a spreadsheet. Click to Print Done This course (GBMT 1010 - Summer 2020) is based on Moffett/Stonehill/Eiteman: Fundamentals of Multinational Finance, 6e ch O
