Problem 11.4 Ganado Europe (D)
Using facts in the chapter for Ganado Europe, assume as in Ganado Europe (C) that the exchange rate on January 2, 2006, in Exhibit 11.4 appreciated from $1.2000/ to $1.5000/. Calculate Ganado Europes translated balance sheet for January 2, 2006 with the new exchange rate using the temporal method.
											a. What is the amount of translation gain or lose?
											b. Where should it appear in the financial statements?
Translation Using the Temporal Method: euro appreciates from $1.2000/euro to $1.5000/euro.
				Just before revaluation				Just after revaluation
						Translated				Translated
		Euros		Exchange Rate		Accounts		Exchange Rate		Accounts
Assets		Statement		(US$/euro)		(US dollars)		(US$/euro)		(US dollars)
Cash		1,600,000		1.2000		$ 1,920,000
Accounts receivable		3,200,000		1.2000		3,840,000
Inventory		2,400,000		1.2180		2,923,200
Net plant & equipment		4,800,000		1.2760		6,124,800
Total		12,000,000				$ 14,808,000
Liabilities & Net Worth
Accounts payable		800,000		1.2000		$ 960,000
Short-term bank debt		1,600,000		1.2000		1,920,000
Long-term debt		1,600,000		1.2000		1,920,000
Common stock		1,800,000		1.2760		2,296,800
Retained earnings		6,200,000		1.2437		7,711,200
CTA account (loss)		-				$ (0)
Total		12,000,000				$ 14,808,000