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    monetary/nonmonetary method

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    Ajax Manufacturing's German subsidiary has the following balance sheet(in DM):

    Cash, marketable securities: 250,000
    Accounts receivable 1,000,000
    Inventory ( at market) 2,700,000
    Fixed assets: 5,100,000
    Total assets DM 9,050,000

    Current liabilities DM 750,000
    Long-term debt 3,400,000
    Equity 4,900,000
    Total liabilities plus equity: DM 9,050,000.
    Suppose the DM appreciates from $0.70 to $0.76 during the period.

    Under the monetary/nonmonetary method what is Ajax's traslation gain(loss)?

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    The monetary/nonmonetary method treats only monetary assets and liabilities as being exposed. All monetary balance sheets accounts (for example, cash, marketable, securities, accounts receivables, notes payable, accounts payable) of a foreign ...

    Solution Summary

    The monetary/nonmonetary method is discussed.