Section B (50 marks) [25 marks each] 1. Lok Kee Sdn. Bhd. is a Malaysian subsidiary...

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Section B (50 marks) [25 marks each] 1. Lok Kee Sdn. Bhd. is a Malaysian subsidiary of Rookie A.G., a MNE established in Germany. Rookie's consolidated financial statements are kept in euro. All of Lok Kee's previous earnings were reinvested as capital. The balance sheet of Lok Kee on 30 June 2020 is in the following: Assets Cash Accounts receivable Inventory Net plant & equipment Total MYR Liabilities & Net Worth 8,250,000 Accounts payable 16,500,000 Long-term debt 24,750,000 Invested capital 33,000,000 82,500,000 Total MYR 12,375,000 24,750,000 45,375,000 82,500,000 On 30 June 2020, the exchange rate was MYR5.00/Euro. On 1 July 2020, the Euro has suddenly appreciated by 10% against the MYR a) What is the MYR/Euro exchange rate on 1 July 2020? (3 marks) b) Calculate the translation gains or loss to Rookie A.G. on 1 July 2020 with current rate method (only), assuming that there is no change in balance sheet accounts between these two days (15 marks) c) How much is the contribution of Lok Kee Sdn. Bhd.'s translation exposure (in Euro) to its parent company, Rookie A.G. on 30 June 2020 using the current rate method? (4 marks) d) How much would the MYR need to depreciate to have the equivalent net translation gain/loss as calculated in b)? Page 1 of 2 (3 marks) (Total: 25 Marks) Section B (50 marks) [25 marks each] 1. Lok Kee Sdn. Bhd. is a Malaysian subsidiary of Rookie A.G., a MNE established in Germany. Rookie's consolidated financial statements are kept in euro. All of Lok Kee's previous earnings were reinvested as capital. The balance sheet of Lok Kee on 30 June 2020 is in the following: Assets Cash Accounts receivable Inventory Net plant & equipment Total MYR Liabilities & Net Worth 8,250,000 Accounts payable 16,500,000 Long-term debt 24,750,000 Invested capital 33,000,000 82,500,000 Total MYR 12,375,000 24,750,000 45,375,000 82,500,000 On 30 June 2020, the exchange rate was MYR5.00/Euro. On 1 July 2020, the Euro has suddenly appreciated by 10% against the MYR a) What is the MYR/Euro exchange rate on 1 July 2020? (3 marks) b) Calculate the translation gains or loss to Rookie A.G. on 1 July 2020 with current rate method (only), assuming that there is no change in balance sheet accounts between these two days (15 marks) c) How much is the contribution of Lok Kee Sdn. Bhd.'s translation exposure (in Euro) to its parent company, Rookie A.G. on 30 June 2020 using the current rate method? (4 marks) d) How much would the MYR need to depreciate to have the equivalent net translation gain/loss as calculated in b)? Page 1 of 2 (3 marks) (Total: 25 Marks)