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Shanghai Corporation, the Chinese affiliate of a U.S manufacturer, has the balance sheet shown below. The current exchange rate is $0.25= CYN1. Assets Liabilities and
- Shanghai Corporation, the Chinese affiliate of a U.S manufacturer, has the balance sheet shown below. The current exchange rate is $0.25= CYN1.
Assets | Liabilities and Stockholders equity |
Cash CNY 70,000 Accounts receivables 160,000 Inventories 240,000 Fixed assets net 410,000 Total CNY 880,000 | Accounts payable CNY 230,000 Long-term debt 290,000
Stockholders equity 360,000 Total CNY 880,000 |
Required:
- If the Chinese Yuan appreciate by 30 percent, what would be the translation effects under current- noncurrent method? (2 marks)
If the Chinese Yuan depreciated by 25 percent, what would be the translation effects under the monetary- nonmonetary method?
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