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The balance sheet of a hypothetical Mexico subsidiary of a U.S. -based multinational enterprise appears in pesos in the first column of table 1. The
The balance sheet of a hypothetical Mexico subsidiary of a U.S. -based multinational enterprise appears in pesos in the first column of table 1. The second column depicts the U.S. dollar equivalent of the Mexican peso(MXN) balances when the exchange rate was MXN1=$0.11. Require: fill the gaps in the table, which applies 4 translation method separately to see the financial statement effects.
U.S. Dollars before Peso U.S. Dollars after Peso Depreciation ($0.10=MXNI) Devaluation Pesos ($0.11 MXNI) Current Current- Monetary- Temporal rate noncurrent nonmonetary Assets Cash $300 S300 (1) (5) (9 (13) $300 (2) (6) (10) (14) S300 (3) (7) (4) (8) (12) (16) (15) (17) (18) (19) (20) 3000 S330 A/R 6000 660 Inventories 9000 990 F/A(net) 18000 1980 Total 36000 $3960 Liabilities and Owners' Equity S- 900 $990 payables L-T debt 12000 1320 O/E 15000 1650 Total 36000 $3960 Accounting Exposure (MXN) Translation gain (los) (S) (23) (27) (21) (25) (29) (33) (22) (26) (30) (34) (24) (28) (32) (36) (31) (35) (37) (38) (39) (40)Step by Step Solution
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