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Kuwait All Logistics (KAL) corporation, a Kuwait based multinational, borrowed euros 10,000,000 from Deutsche Bank at the beginning of the calendar year when the exchange
Kuwait All Logistics (KAL) corporation, a Kuwait based multinational, borrowed euros 10,000,000 from Deutsche Bank at the beginning of the calendar year when the exchange rate was Eur 2.67 = KD 1. Before repaying this one year loan, KAL the KD depreciated to EUR 2.5 = KD 1. It also dicovers that its Berlin subsidiary has an exposed net asset position of EUR 15,000,000 which will produce a translation gain upon consolidation. What is the exchange gain or loss that will be reported in consolidated income if:
- The Euro is the foreign operation's functional currency?
- The Kuwaiti dinar is the foreign operation's functional currency?
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