Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

image text in transcribed
image text in transcribed
image text in transcribed
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 $1.2600/ to $0.9200/. Recalculate Ganado Europe's translated balance sheet for January 2, 2016, with the new exchange rate using the temporal rate method as shown in the popup window. I a. What is the amount of translation gain or loss? b. Where should it appear in the financial statements? c. Why does the translation loss or gain under the temporal method differ from the loss or gain under the current rate method? Assets Cash Accounts receivable Inventory Net plant and equipment Total In Euros () 2,000,000 3,300,000 2,200,000 5,400,000 12,900,000 December 31, 2015 Exchange Rate Translated (US$/euro) Accounts (US) 1.2600 $2,520,000 1.2600 4,158,000 1.2810 2,818,200 1.3360 7,214,400 $16,710,600 January 2, 2016 Exchange Rate Translated (US$/euro) Accounts (USS) 0.9200 $1,840,000 0.9200 3,036,000 1.2810 2,818,200 1.3360 7,214,400 $14,908,600 Accounts payable Short-term bank debt Long-term debt Common stock Retained earnings Translation gain (loss) Total 900,000 1,500,000 1,800,000 1,900,000 6,800,000 1.2600 1.2600 1.2600 . 1.3360 1.3017 (a) $1,134,000 1,890,000 2,268,000 2,538,400 8,880,200 0.9200 0.9200 0.9200 1.3360 1.3017 (b) (c) $828,000 1,380,000 1,656,000 2,538,400 8,880,200 ? $14,908,600 12,900,000 $16,710,600

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Innovation Regulation And Crises In History

Authors: Harold James

1st Edition

0367669528, 978-0367669522

More Books

Students also viewed these Finance questions

Question

=+ What is the role of government in bargaining?

Answered: 1 week ago

Question

=+ Who is the negotiation partner at company level?

Answered: 1 week ago

Question

=+Which associations exist?

Answered: 1 week ago