Translation Gain/(Loss) using Current/Noncurrent Methods
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)?
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Solution Summary
The solution calculates translation gain(loss) using current/noncurrent method in the attached Excel file.
$2.49