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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

  1. 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:

  1. 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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