How was Retained Earning found for Translated Accounts????
Exhibit 11.6 Ganado Europe's Translation Loss After Depreciation of the Euro: Temporal Method December 31, 2010 January 2, 2011 Assets In Euros () Exchange Rate (US$/euro) Translated Accounts (US$) Exchange Rate (US$/euro) Translated Accounts (US$) Cash 1,600,000 1.2000 $ 1,920,000 1.0000 $ 1,600,000 Accounts receivable 3,200,000 1.2000 3,840,000 1.0000 3,200,000 Inventory 2,400,000 1.2180 2,923,200 1.2180 2.923,200 4.800,000 1.2760 6.124,8001 1.2760 6.124.800 Net plant and equipment Total 12,000,000 $14,808,000 $13,848,000 Liabilities and Net Worth Accounts payable 800,000 1.2000 $ 960,000 1.0000 $ 800,000 Short-term bank debt 1,600,000 1.2000 1,920,000 1.0000 1,600,000 Long-term debt 1,600,000 1.2000 1,920,000 1.0000 1,600,000 Common stock 1.800,000 1.2760 2,296,800 1.2760 2.296,800 Retained earnings 6.200.000 1.2437(a) 7,711,200 1.2437(b) 7,711,200 Translation gain (loss) 5 (160,000)(C) Total 12,000,000 $14,808,000 $13.848,000 (a) Dollar retained earnings before depreciation are the cumulative sum of additions to retained earnings of all prior years, translated at 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 of $160,000 would be closed into retained earnings through the income statement rather than left as a separate line item as shown here. Ending retained earnings would actually be 7,711,200 - $160,000 = 7,551,200. Exhibit 11.6 Ganado Europe's Translation Loss After Depreciation of the Euro: Temporal Method December 31, 2010 January 2, 2011 Assets In Euros () Exchange Rate (US$/euro) Translated Accounts (US$) Exchange Rate (US$/euro) Translated Accounts (US$) Cash 1,600,000 1.2000 $ 1,920,000 1.0000 $ 1,600,000 Accounts receivable 3,200,000 1.2000 3,840,000 1.0000 3,200,000 Inventory 2,400,000 1.2180 2,923,200 1.2180 2.923,200 4.800,000 1.2760 6.124,8001 1.2760 6.124.800 Net plant and equipment Total 12,000,000 $14,808,000 $13,848,000 Liabilities and Net Worth Accounts payable 800,000 1.2000 $ 960,000 1.0000 $ 800,000 Short-term bank debt 1,600,000 1.2000 1,920,000 1.0000 1,600,000 Long-term debt 1,600,000 1.2000 1,920,000 1.0000 1,600,000 Common stock 1.800,000 1.2760 2,296,800 1.2760 2.296,800 Retained earnings 6.200.000 1.2437(a) 7,711,200 1.2437(b) 7,711,200 Translation gain (loss) 5 (160,000)(C) Total 12,000,000 $14,808,000 $13.848,000 (a) Dollar retained earnings before depreciation are the cumulative sum of additions to retained earnings of all prior years, translated at 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 of $160,000 would be closed into retained earnings through the income statement rather than left as a separate line item as shown here. Ending retained earnings would actually be 7,711,200 - $160,000 = 7,551,200
