Homework:Chapter 11 Homework

Question 7, Problem 11-7 (algorithmic)

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Part 1

Tristan Narvaja, S.A. (C).Tristan Narvaja, S.A., is the Uruguayan subsidiary of a U.S. manufacturing company. Its balance sheet for January 1 is shown in the popup window,

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. The January 1 exchange rate between the U.S. dollar and the peso Uruguayo ($U) is

$U21/$.

Determine Tristan Narvaja's contribution to the translation exposure of its parent on January 1, using the current rate method.

a. Determine Tristan Narvaja's contribution to the translation exposure of its parent on January 1st, using the current rate method.

b. Calculate Tristan Narvaja's contribution to its parent's translation gain or loss if the exchange rate on December 31st is $U14/$. Assume all peso Uruguayo accounts remain as they were at the beginning of the year.

Balance Sheet (thousands of pesos Uruguayo, $U)
Assets				Liabilities and Net Worth
Cash	$U60,000			Current liabilities	$U20,000
Accounts receivable	110,000			Long-term debt	50,000
Inventory	150,000			Capital stock	280,000
Net plant & equipment	240,000			Retained earnings	210,000
	$U560,000				$U560,000