Question
In 1995, Ajax Manufacturing's German subsidiary has the following balance sheet: Cash, marketable securities Accounts receivable Inventory (at market. Fixed Assets Total assets DM 250,000
In 1995, Ajax Manufacturing's German subsidiary has the following balance sheet: Cash, marketable securities Accounts receivable Inventory (at market. Fixed Assets Total assets DM 250,000 1,000,000 2,700,000 5,100,000 ----------------- DM 9,050,000 Current liabilities Long-term debt Equity Total liabilities plus equity DM 750,000 3,400,000 4,900,000 --------------- DM 9,050,000
Suppose the DM appreciates from $0.70 to $0.76 during the period.
Under the current rate method, what is Ajax's translation gain (loss).?
a) a gain of $294,000
b) a gain of $192,000
c) a loss of $174,000
d) a loss of $12,000
Answer:a
Please show work. Thanks,
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