Tristan Narvaja, S.A., is the Uruguayan subsidiary of a U.S. manufacturing company. Its balance sheet for January 1 follows. The January 1 exchange rate between the U.S. dollar and the peso Uruguayo ($U) is $U20/$. Determine Tristan Narvaja's contribution to the translation exposure of its parent on January 1, using the current rate method.

a. Determine Montevideo's contribution to the translation exposure of its parent on January 1st, using the current rate method.
b. Calculate Montevideo's contribution to its parent's translation loss if the exchange rate on December 31st is $U20/US$. Assume all peso Uruguayo accounts remain as they were at the beginning of the year.

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Balance Sheet (thousands of pesos Uruguayo, SU) Assets Liabilities and Net Worth SU60,000 Current U30,000 Accounts receivable Long-term 20,000 debt 20,000 Capital stock 300,000 20,000 SU540,000 Retained Net plant and equipment 240,000 earnings