Ganado Europe (C). Using facts in the chapter for Ganado Europe, assume the exchange rate on January 2, 2016, in Exhibit 11.5 appreciated from $1.2900/€ to $1.5800/€. Calculate Ganado Europe's translated balance sheet for January 2, 2016, with the new exchange rate using the current rate method as shown in the popup window, a. What is the amount of translation gain or loss? b. Where should it appear in the financial statements? Data table a. What is the amount of translation gain or loss? Enter a positive number for a gain and negative for a loss. (Round to the nearest dollar.) (Click on the following icon in order to copy its contents into a spreadsheet.) EXHIBIT 11.5 Ganado Europe's Translation Loss After Depreciation of the Euro: Current Rate Method Assets Cash In Euros (€) (US$/euro) December 31, 2015 Exchange Rate Translated Accounts (US$) January 2, 2016 Exchange Rate (US$/euro) Translated Accounts (US$) 1,500,000 1.2900 $1,935,000 1.5800 $2,370,000 Accounts receivable Inventory 3,300,000 1.2900 4,257,000 1.5800 5,214,000 3,000,000 1.2900 3,870,000 1.5800 4,740,000 Net plant and equipment 5,100,000 1.2900 6,579,000 1.5800 8,058,000 Total 12,900,000 $16,641,000 $20,382,000 Liabilities and Net Worth Accounts payable 1,300,000 1.2900 $1,677,000 1.5800 $2,054,000 Short-term bank debt 1,400,000 1.2900 1,806,000 1.5800 2,212,000 Long-term debt 1,100,000 1.2900 1,419,000 1.5800 1,738,000 Common stock 2,000,000 1.3530 2,706,000 1.3530 2,706,000 Retained earnings 7,100,000 1.2900 (a) 9,159,000 1.2900 (b) 9,159,000 Translation adjustment (CTA) (126,000) 2,513,000 Total 12,900,000 $16,641,000 $20,382,000 (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.
Ganado Europe (C). Using facts in the chapter for Ganado Europe, assume the exchange rate on January 2, 2016, in Exhibit 11.5 appreciated from $1.2900/€ to $1.5800/€. Calculate Ganado Europe's translated balance sheet for January 2, 2016, with the new exchange rate using the current rate method as shown in the popup window, a. What is the amount of translation gain or loss? b. Where should it appear in the financial statements? Data table a. What is the amount of translation gain or loss? Enter a positive number for a gain and negative for a loss. (Round to the nearest dollar.) (Click on the following icon in order to copy its contents into a spreadsheet.) EXHIBIT 11.5 Ganado Europe's Translation Loss After Depreciation of the Euro: Current Rate Method Assets Cash In Euros (€) (US$/euro) December 31, 2015 Exchange Rate Translated Accounts (US$) January 2, 2016 Exchange Rate (US$/euro) Translated Accounts (US$) 1,500,000 1.2900 $1,935,000 1.5800 $2,370,000 Accounts receivable Inventory 3,300,000 1.2900 4,257,000 1.5800 5,214,000 3,000,000 1.2900 3,870,000 1.5800 4,740,000 Net plant and equipment 5,100,000 1.2900 6,579,000 1.5800 8,058,000 Total 12,900,000 $16,641,000 $20,382,000 Liabilities and Net Worth Accounts payable 1,300,000 1.2900 $1,677,000 1.5800 $2,054,000 Short-term bank debt 1,400,000 1.2900 1,806,000 1.5800 2,212,000 Long-term debt 1,100,000 1.2900 1,419,000 1.5800 1,738,000 Common stock 2,000,000 1.3530 2,706,000 1.3530 2,706,000 Retained earnings 7,100,000 1.2900 (a) 9,159,000 1.2900 (b) 9,159,000 Translation adjustment (CTA) (126,000) 2,513,000 Total 12,900,000 $16,641,000 $20,382,000 (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.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Transcribed Image Text:Ganado Europe (C). Using facts in the chapter for Ganado Europe, assume the exchange rate on January 2, 2016, in Exhibit 11.5 appreciated from $1.2900/€ to $1.5800/€. Calculate Ganado Europe's translated balance sheet for January 2, 2016, with the new
exchange rate using the current rate method as shown in the popup window,
a. What is the amount of translation gain or loss?
b. Where should it appear in the financial statements?
Data table
a. What is the amount of translation gain or loss? Enter a positive number for a gain and negative for a loss.
(Round to the nearest dollar.)
(Click on the following icon in order to copy its contents into a spreadsheet.)
EXHIBIT 11.5 Ganado Europe's Translation Loss After Depreciation of the Euro: Current Rate Method
Assets
Cash
In Euros (€)
(US$/euro)
December 31, 2015
Exchange Rate
Translated
Accounts (US$)
January 2, 2016
Exchange Rate
(US$/euro)
Translated
Accounts (US$)
1,500,000
1.2900
$1,935,000
1.5800
$2,370,000
Accounts receivable
Inventory
3,300,000
1.2900
4,257,000
1.5800
5,214,000
3,000,000
1.2900
3,870,000
1.5800
4,740,000
Net plant and equipment
5,100,000
1.2900
6,579,000
1.5800
8,058,000
Total
12,900,000
$16,641,000
$20,382,000
Liabilities and Net Worth
Accounts payable
1,300,000
1.2900
$1,677,000
1.5800
$2,054,000
Short-term bank debt
1,400,000
1.2900
1,806,000
1.5800
2,212,000
Long-term debt
1,100,000
1.2900
1,419,000
1.5800
1,738,000
Common stock
2,000,000
1.3530
2,706,000
1.3530
2,706,000
Retained earnings
7,100,000
1.2900 (a)
9,159,000
1.2900 (b)
9,159,000
Translation adjustment (CTA)
(126,000)
2,513,000
Total
12,900,000
$16,641,000
$20,382,000
(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.
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