Ganado Europe (B). Using facts in the chapter for Ganado Europe, assume that the exchange rate on January 2. 2016, in Ex

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Ganado Europe B Using Facts In The Chapter For Ganado Europe Assume That The Exchange Rate On January 2 2016 In Ex 1 (25.36 KiB) Viewed 27 times

Ganado Europe B Using Facts In The Chapter For Ganado Europe Assume That The Exchange Rate On January 2 2016 In Ex 2 (48.34 KiB) Viewed 27 times

Ganado Europe (B). Using facts in the chapter for Ganado Europe, assume that the exchange rate on January 2. 2016, in Exhibit 11.6 dropped in value from $1.1400/€ to $0.9700/€. Recalculate 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? c. Why does the translation loss or gain under the temporal method differ from the loss or gain under the current rate method?

Assets Cash Accounts receivable Inventory Net plant and equipment Total Liabilities and Net Worth Accounts payable Short-term bank debt Long-term debt Common stock Retained earnings Translation gain (loss) Total In Euros (€) 1,700,000 2,900,000 2,100,000 4,600,000 11,300,000 800,000 1,200,000 1,700,000 2,300,000 5,300,000 December 31, 2015 Exchange Rate (US$/euro) 1.1400 1.1400 1.1570 1.2180 1.1400 1.1400 1.1400 12180 1.1895 (a) Translated Accounts (US$) $1,938,000 3,306,000 2,429,700 5,602,800 $13,276,500 $912,000 1,368,000 1,938,000 2,801,400 6,257,100 January 2, 2016 Exchange Rate (US$/euro) 0.9700 0.9700 1.1570 1.2180 0.9700 0.9700 0.9700 1.2180 1.1895 (b) (c) Translated Accounts (USS) $1,649,000 2,813,000 2,429,700 5,602,800 $12,494,500 $776,000 1,164,000 1,649,000 2,801,400 6,257,100 ? 11,300,000 $13,276,500 $12,494,500 (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.