Answer Happy

Ganado Europe (A). Using facts in the chapter for Ganado Europe, assume the exchange rate on January 2. 2016, in Exhibit 11.5 dropped in value from $1 2300/€ to $0.9000/€. Recalculate 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?

December 31, 2015 In Euros (€) (US$/euro) Accounts (USS) Exchange Rate Translated Exchange Rate 1,400,000 1.2300 $1,722,000 2,900,000 1.2300 3,567,000 2,100,000 1.2300 2,583,000 4,600,000 1.2300 5,658,000 11,000,000 $13,530,000 30000 1,500,000 1,2300 $1,845,000 1,900,000 1.2300 2,337,000 1,200,000 1.2300 1,476,000 1,600,000 1.2890 2,062,400 1.2300 (a) 5,904,000 (94,400) Assets Cash Accounts receivable Inventory Net plant and equipment Total Liabilities and Net Worth Accounts payable Short-term bank debt Long-term debt Common stock Retained earnings Translation adjustment (CTA) 4,800,000 January 2, 2016 (US$/euro) Accounts (USS) 0.9000 0.9000 0.9000 0.9000 0.9000 0.9000 0.9000 1.2890 Translated 1.2300 (b) $1,260,000 2,610,000 1,890,000 4,140,000 $9,900,000 $1,350,000 1,710,000 1,080,000 2,062,400 5,904,000 (2,206,400) $9,900,000 Total 11,000,000 $13,530,000 (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