Problem 11.8 Bangkok Instruments, Ltd (A) Bangkok Instruments, Ltd., is the Thai affiliate of a U.S. seismic instrument manufacturer. Bangkok Instruments manufactures the instruments primarily for the oil and gas industry globally, though with recent commodity price increases of all kinds -- including copper -- its business has begun to grow rapidly. Sales are primarily to multinational companies based in the United States and Europe. bankok Instruments' balance sheet in thousands of Thai baht (B) as of March 31st is as follows. Using the data presented assume that the Thai baht dropped in value from B30$ to B40$ between March 31st and April 1st. Assuming no change in balance sheet accounts between these two days, calculate the gain or loss from translation by both the current rate method (3 pts) and the temporal method (3 pts). Explain the difference in translation gain or loss under the 2 different methods in terms changes in the value of exposed accounts under both methods. 2 pts) TRANSLATION BY THE CURRENT RATE METHOD Balance Sheet (thousands) Before Devaluation After Devaluation Exchange Rate (Baht/US$) Translated Accounts US dollars Assets Cash Accounts receivable Inventory Net plant & equipment Total Thai baht Statement 24,000 36,000 48,000 60,000 $168,000 Exchange Rate (Baht/US$) 30 30 30 30 Translated Accounts US dollars 800 1,200 1,600 2,000 5,600 $ $ Liabilities & Net Worth Accounts payable Bank loans Common stock $18,000 60,000 18,000 30 30 20 600 2,000 900 34 2,100 Retained earnings CTA account gain(loss) 72,000 0 1168,000 Total 5,600 $ TRANSLATION BY THE TEMPORAL METHOD Balance Sheet (thousands) Before Devaluation After Devaluation Exchange Rate (Baht/US$) Translated Accounts US dollars Assets Cash Accounts receivable Inventory Net plant & equipment Total Thai baht Statement 24,000 36,000 48,000 60,000 1168,000 Exchange Rate (Baht/US$) 30 30 30 20 Translated Accounts US dollars 800 1,200 1,600 3,000 6,600 $ $ $ Liabilities & Net Worth Accounts payable Bank loans Common stock Retained earnings CTA account gain(loss) Total $18,000 60,000 18,000 72,000 0 $168,000 30 30 20 23 600 2,000 900 3,100 $ 6,600 $