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Currency translation methods: temporal 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 temporal method what is Ajax's traslation gain(loss)?

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Solution Summary

The solution uses temporal method to calculate Ajax's traslation gain(loss).

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