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Jersey Brown Coffee Corporation (PLC), the subsidiary of the Malaysia based Brown Coffee Group Berhad has the balance sheet shown below. The current exchange rate
Jersey Brown Coffee Corporation (PLC), the subsidiary of the Malaysia based Brown Coffee Group Berhad has the balance sheet shown below. The current exchange rate is RM1 = 0.2. Jersey Brown Coffee Corporation Ringgit Malaysia (RM) vs. UK Pound () (0.2 = RM1) Amount RM Cash 10,000 50,000 Trade Receivable 20,000 100,000 Inventories (Market based) 13,500 67,500 Fixed assets, net 30,000 150,000 Total 73,500 367,500 Liabilities & Owners Equity Long Term Bank Loans 25,000 125,000 Trade Payable 15,500 77,500 Stockholders' equity 33,000 165,000 Total 73,500 367,500 Required: (i) Assuming the Ringgit Malaysia (RM) strengthens from RMI 0.2 to RMI = 0.22. Translate the Jersey Brown Coffee Corporation's balance sheet from into RM under (1) Current Non current method (2) Monetary - Non monetary method and (3) Temporal method. Also show the accounting exposure and translation gain/loss under each method. (10 marks) (ii) Assuming the Ringgit Malaysia (RM) weakens from RMI 0.2 to RM1 0.16 Translate the Jersey Brown Coffee Corporation's balance sheet from into RM under (1) Current - Non current method (2) Monetary - Non monetary method and (3) Temporal method. Also show the accounting exposure and translation gain/loss under each method. (10 marks)
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