Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Using facts in the chapter for Ganado Europe, assume that the exchange rate on January 2, 2016, in Exhibit 11.6 appreciated from $1.2000/ to $1.5000/.

Using facts in the chapter for Ganado Europe, assume that the exchange rate on January 2, 2016, in Exhibit 11.6 appreciated from $1.2000/ to $1.5000/. Calculate Ganado Europe's translated balance sheet for January 2, 2016, with the new exchange rate using the temporal rate method as shown in the popup window

a. What is the amount of translation gain or loss?

b. Where should it appear in the financial statements?

image text in transcribed

image text in transcribed

Ganado Europe (D). Using facts in the chapter for Ganado Europe, assume that the exchange rate on January 2, 2016, in Exhibit 11.6 appreciated from $1.2000/ to $1.5000/. Calculate Ganado Europe's translated balance sheet for January 2, 2016, with the new exchange rate using the temporal rate method as shown in the popup window, E a. What is the amount of translation gain or loss? b. Where should it appear in the financial statements? EXHIBIT 11.6 Ganado Europe's Translation Loss After Depreciation of the Euro: Temporal Method December 31, 2015 January 2, 2016 Exchange Rate Translated Exchange Rate Translated Assets In Euros () (US$/euro) Accounts (US$) (US$/euro) Accounts (US$) Cash 1,600,000 1.2000 $1,920,000 1.5000 $2,400,000 Accounts receivable 3,200,000 1.2000 3,840,000 1.5000 4,800,000 Inventory 2,400,000 1.2180 2,923,200 1.2180 2,923,200 Net plant and equipment 4,800,000 1.2760 6,124,800 1.2760 6,124,800 Total 12,000,000 $14,808,000 $16,248,000 Liabilities and Net Worth Accounts payable 800,000 1.2000 $960,000 1.5000 $1,200,000 Short-term bank debt 1,600,000 1.2000 1,920,000 1.5000 2,400,000 Long-term debt 1,600,000 1.2000 1,920,000 1.5000 2,400,000 Common stock 1,800,000 1.2760 2,296,800 1.2760 2,296,800 Retained earnings 6,200,000 1.2437 (a) 7,711,200 1.2437 (b) 7,711,200 Translation gain (loss) (c) ? Total 12,000,000 $14,808,000 $16,248,000 (a) Dollar retained earnings before depreciation are the cumulative sum of additions to retained earnings of all prior years, translated to exchange rates in each year. (b) Translated into dollars at the same rate as before depreciation of the euro. (c) Under the temporal method, the translation loss would be closed into retained earnings through the income statement rather than left as a separate line item as shown here. Click on the icon located on the top-right corner of the data table in order to copy its contents into a spreadsheet

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Advances In Quantitative Analysis Of Finance And Accounting (Vol. 5)

Authors: Lee Cheng Few

1st Edition

9812706283, 9789812706287

More Books

Students also viewed these Accounting questions