Johnson Controls Corp., a major U.S. auto parts supplier, has a manufacturing subsidiary in Nuevo Laredo, Mexico, which assembles wiring harnesses for auto electrical systems. Quarterly, Johnson Controls must consolidate the financial statements of all its foreign subsidiaries into one overall corporate-wide financial statement as required by U.S. accounting standards. This results in translation gains and losses as exchange rates fluctuate against the U.S. dollar. The Mexican peso has been particularly volatile the last few years so the Treasurer of Johnson Controls has been following the translation exposure of the Mexican subsidiary with unusual interest. Prepare the Translation Exposure Report by both the current rate and temporal methods from the balance sheet information for the Mexican subsidiary presented below (all accounts are in pesos 000s).

Assets Liabilities

Cash Ps 5400 Accounts Payable Ps 4600

Accounts Receivable 8750 Bank loans 13800

Inventory 12860 Bonds 8370

Plant & Equipment 25430 Common Stock 24000

Retained Earnings 1670

1. If the exchange rate is Ps 14.2650/$ at the end of the next quarter, what would be the translation gain or loss by the a. current rate method and b. temporal method?
2. If the exchange rate is Ps 16.8455/$ at the end of the next quarter, what would be the translation gain or loss by the a. current rate method and b. temporal method?

Assets Liabilities Cash Ps 5400 Accounts Payable Ps 4600 Accounts Receivable 8750 Bank loans 13800 Inventory 12860 Bonds 8370 Plant & Equipment 25430 Common Stock 24000 Retained Earnings 1670 If the exchange rate is Ps 14.2650/$ at the end of the next quarter, what would be the translation gain or loss by the a. current rate method and b. temporal method? If the exchange rate is Ps 16.8455/$ at the end of the next quarter, what would be the translation gain or loss by the a. current rate method and b. temporal method?