Question
Translation and Remeasurement Gain and Loss Costco Canada Holdings is a Canadian subsidiary of Costco Wholesale Corporation, a U.S. company. Assume that the following data
Translation and Remeasurement Gain and Loss
Costco Canada Holdings is a Canadian subsidiary of Costco Wholesale Corporation, a U.S. company. Assume that the following data relate to Costco Canadas activities for 2023 (in millions).
Net monetary assets (liabilities), January 1, 2023 | C$ 700 |
Acquisition of plant assets for debt, February 15, 2023 | 1,000 |
Purchase of inventory made evenly during 2023 | 3,500 |
Collection of receivables outstanding at January 1, 2023 | 2,700 |
Sales made evenly during 2023 | 6,000 |
Cost of goods sold | 3,300 |
Depreciation of assets acquired when the exchange rate was $0.85/C$ | 400 |
Current operating expenses (excluding depreciation and amortization),incurred evenly during 2023 | 1,200 |
Refinancing or "rollover" of commercial paper | 800 |
Exchange rates ($/C$) during 2023 are:
January 1, 2023 | $0.80 | Average for 2023 | $0.75 | |
February 15, 2023 | 0.78 | December 31, 2023 | 0.72 |
(a) Assuming Costco Canadas functional currency is the U.S. dollar, prepare a schedule to compute the remeasurement gain or loss for 2023.
Instructions:
Use negative signs with answers to indicate a negative exposed position balance.
Use negative signs with answers to indicate an amount that reduces the exposed position balance.
Using the drop-down menu, select the appropriate answer to indicate a remeasurement gain or remeasurement loss.
Do not use a negative sign with your remeasurement gain or remeasurement loss answer.
(in millions) | Amount (C$) | $/C$ | Amount ($) |
---|---|---|---|
Exposed position, 1/1/23 | Answer | Answer | Answer |
Acquisition of plant assets for debt | Answer | Answer | Answer |
Purchase of inventory | Answer | Answer | Answer |
Sales | Answer | Answer | Answer |
Operating expenses | Answer | Answer | Answer |
Answer | |||
Exposed position, 12/31/23 | Answer | Answer | Answer |
AnswerRemeasurement gainRemeasurement loss | Answer |
(b) Assuming Costco Canadas functional currency is the Canadian dollar, prepare a schedule to compute the translation gain or loss for 2023. Assume net assets on January 1, 2023, amounted to C$1,200 million.
Instructions:
Use negative signs with answers to indicate a negative exposed position balance.
Use negative signs with answers to indicate an amount that reduces the exposed position balance.
Using the drop-down menu, select the appropriate answer to indicate a translation gain or translation loss.
Do not use a negative sign with your translation gain or translation loss answer.
(in millions) | Amount (C$) | $/C$ | Amount ($) |
---|---|---|---|
Exposed position, 1/1/23 | Answer | Answer | Answer |
Net income in 2023 | Answer | Answer | Answer |
Answer | |||
Exposed position, 12/31/23 | Answer | Answer | Answer |
AnswerTranslation gainTranslation loss | Answer |
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