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    Translation Gain/(Loss) using Current/Noncurrent Methods

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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 current/noncurrent method what is Ajax's traslation gain(loss)?

    © BrainMass Inc. brainmass.com October 9, 2019, 4:15 pm ad1c9bdddf
    https://brainmass.com/economics/exchange-rates/translation-gain-loss-current-noncurrent-methods-27036

    Solution Summary

    The solution calculates translation gain(loss) using current/noncurrent method in the attached Excel file.

    $2.19