1. The Medicu Company of Nashville has a subsidiary in Indonesia, where the currency is the...
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1. The Medicu Company of Nashville has a subsidiary in Indonesia, where the currency is the rupiah (Rp). Medicu uses FASB 52 or the Current Rate Method to translate its foreign operations. The current balance sheet of the Indonesian subsidiary, in thousands of rupiah, is: parent nashville sveriadiary Indonesia (a) (b) Assets (Rp) Cash Cash (in S) O Accounts Receivable Accounts Receivable (in S) Inventory Net Plant and Equipment Total 4000 3200 8000 Liabilities and Net Worth (Rp) Accrued Wages 4800 Bank note payable 12000 12000 20800 49600 The current exchange rates are: Spot rate One-year forward rate Medicu's forecast of the spot rate one year hence 8800 Long-term debt (in S) 9600 16000 Shareholders' Equity 49600 Total Rp 2000/S Rp 2200/S Rp 2500/S Assume that the Indonesian subsidiary chooses its functional currency to be the U.S. $. What are the accounting exposure and the translation gain/loss if the exchange rate devalues as Medicu expected? (4 points) Assume that the Indonesian subsidiary chooses its functional currency to be the Indonesian rupiah. What are the accounting exposure and the translation gain/loss if the exchange rate devalues as Medicu expected? (4 points) Does the Indonesian subsidiary of Medicu have any transaction exposure? If so, how much and what is the transaction gain or loss if the rupiah devalues as Medicu expected? (4 points) 1. The Medicu Company of Nashville has a subsidiary in Indonesia, where the currency is the rupiah (Rp). Medicu uses FASB 52 or the Current Rate Method to translate its foreign operations. The current balance sheet of the Indonesian subsidiary, in thousands of rupiah, is: parent nashville sveriadiary Indonesia (a) (b) Assets (Rp) Cash Cash (in S) O Accounts Receivable Accounts Receivable (in S) Inventory Net Plant and Equipment Total 4000 3200 8000 Liabilities and Net Worth (Rp) Accrued Wages 4800 Bank note payable 12000 12000 20800 49600 The current exchange rates are: Spot rate One-year forward rate Medicu's forecast of the spot rate one year hence 8800 Long-term debt (in S) 9600 16000 Shareholders' Equity 49600 Total Rp 2000/S Rp 2200/S Rp 2500/S Assume that the Indonesian subsidiary chooses its functional currency to be the U.S. $. What are the accounting exposure and the translation gain/loss if the exchange rate devalues as Medicu expected? (4 points) Assume that the Indonesian subsidiary chooses its functional currency to be the Indonesian rupiah. What are the accounting exposure and the translation gain/loss if the exchange rate devalues as Medicu expected? (4 points) Does the Indonesian subsidiary of Medicu have any transaction exposure? If so, how much and what is the transaction gain or loss if the rupiah devalues as Medicu expected? (4 points)
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Answer rating: 100% (QA)
a Accounting exposure 16000 Translation gainloss 7200 Rp12000 x Rp2500... View the full answer
Related Book For
Financial Reporting And Analysis
ISBN: 9781260247848
8th Edition
Authors: Lawrence Revsine, Daniel Collins, Bruce Johnson, Fred Mittelstaedt, Leonard Soffer
Posted Date:
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