International accounting

Question 1 (4 marks Compare and contrast features of the major foreign currency translation methods. Which method do you think is the best? Explain why Question 2 (6 marks Demure Corporation, the Chinese affiliate of a U.S. manufacturer, has the balance sheet shown below. The current exchange rate is $.0.15 CNY? Balance Sheet of Shanghai Corporation (000's) Assets Cash Accounts receivable Inventories (cost-24,000 Fixed assets, net Total assets CNY 19,000 Accounts payable 24,000 Notes payable 22,000 Bonds payabl 35,000 Stockholders' equity CNY21,000 10,000 37,000 32,000 CNY100,000 CNY100,000 Total liabilities & Stockholders' equity Inventories are carried at the lower of cost or market. Required: a. Translate the Chinese dollar balance sheet of Demure Corporation into U.S. dollars at the current exchange rate of $0.15-CNY?. All monetary accounts in Shanghai's balance sheet are denominated in Chinese yuan. b. Assume the Chinese yuan revalues from $0.15 CNY1 to $0.1875 CNY1. What would be the translation effect if Shanghai's balance sheet is translated by the current-noncurrent method? By the monetary-nonmonetary method? c. Assume instead that the Chinese yuan weakens from $0.15-CNY1 to $0.1125 CNY1. What would be the translation effect under each of the two translation methods? d. What would be the translation effect if Demure Corporation's balance sheet were translated by the temporal method assuming the Chinese yuan appreciates by 25 percent? By the current rate method? e. If the Chinese yuan depreciates by 25 percent, what would be the translation effects under each of the two methods in requirement d? Based on your previous calculations, which translation method-current-noncurrent, monetary- nonmonetary, temporal, or current-gives statement readers the most meaningful information? Critically discuss. f