3. Halon Norway, the Norwegian subsidiary of a U.S. company, Halon, Inc., has the following balance sheet: Assets (NKr t

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3 Halon Norway The Norwegian Subsidiary Of A U S Company Halon Inc Has The Following Balance Sheet Assets Nkr T 1 (61.55 KiB) Viewed 52 times

3. Halon Norway, the Norwegian subsidiary of a U.S. company, Halon, Inc., has the following balance sheet: Assets (NKr thousands) Liabilities (NKr thousands) Cash, marketable securities 7,000 Accounts payable 14,000 Accounts receivable 18,000 Short-term debt 8,000 Inventory 31,000 Long-term debt 45,000 Net fixed assets 63,000 Equity 52.000 NKr119,000 NK=119,000 a. At the current spot rate of $0.21/NKr, calculate Halon Norway's accounting exposure under the current noncurrent, monetary/nonmonetary, temporal, and current rate methods. ANSWER. Under the current/noncurrent method, Halon Norway's accounting exposure is NK-34 million (7 + 18+31 - 14 - 8, in millions), or $7.14 million (0.21 x 34 million). Its monetary/nonmonetary method accounting exposure is - NK142 million (7 + 18 - 14 - 8 - 45, in millions), or -$8.82 million (0.21 x -42 million). Halon Norway's temporal method exposure is the same as its current/noncurrent monetary/nonmonetary method exposure. Under the current rate method, Halon Norway's exposure is its equity of NK 52 million, or $10.92 million (0.21 x 52 million). The calculations assume that all assets and liabilities are denominated in NK. b. Suppose the Norwegian krone depreciates to S0.17. Produce balance sheets for Halon Norway at the new exchange rate under each of the four alternative translation methods.