Question

In: Finance

Tristan​ Narvaja, S.A.​ (B).  Tristan​ Narvaja, S.A., is the Uruguayan subsidiary of a U.S. manufacturing company....

Tristan​ Narvaja, S.A.​ (B).  Tristan​ Narvaja, S.A., is the Uruguayan subsidiary of a U.S. manufacturing company. Its balance sheet for January 1 is shown in the popup​ window.The January 1 exchange rate between the U.S. dollar and the peso Uruguayo​ ($U) is ​$U25​/$. Determine Tristan​ Narvaja's contribution to the translation exposure of its parent on January​ 1, using the current rate method.

Assets       Liabilities and Net Worth  
Cash   70,000   Current liabilities   20,000
Accounts receivable   140,000   Long-term debt   70,000
Inventory   110,000   Capital stock   270,000
Net plant & equipment   240,000   Retained earnings   200,000
   560,000       560,000

a. Using the current rate​ method, what is Tristan​ Narvaja's contribution to the translation exposure of its parent on January​1st? $U___ (Round to the nearest peso​ Uruguayo.)

b. What is Tristan​ Narvaja's contribution to its​ parent's translation loss if the exchange rate on December 31st is ​$U28​/$?​$__ (Round to the nearest​ dollar.)

Solutions

Expert Solution

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

Kerry Manufacturing Company is a German subsidiary of a U.S. company. Kerry records its operations and...
Kerry Manufacturing Company is a German subsidiary of a U.S. company. Kerry records its operations and prepares financial statements in euros. However, its functional currency is the British pound. Kerry was organized and acquired by the U.S. company on June 1, 20X4. The cumulative translation adjustment as of December 31, 20X6, was $79,860. The value of the subsidiary's retained earnings expressed in British pounds and U.S. dollars as of December 31, 20X7, was 365,000 pounds and $618,000, respectively. On March...
Crain Company has a manufacturing subsidiary in Singapore that produces high-end exercise equipment for U.S. consumers....
Crain Company has a manufacturing subsidiary in Singapore that produces high-end exercise equipment for U.S. consumers. The manufacturing subsidiary has total manufacturing costs of $1,530,000, plus general and administrative expenses of $353,000. The manufacturing unit sells the equipment for $2,530,000 to the U.S. marketing subsidiary, which sells it to the final consumer for an aggregate of $3,530,000. The sales subsidiary has total marketing, general, and administrative costs of $203,000. Assume that Singapore has a corporate tax rate of 33% and...
Crain Company has a manufacturing subsidiary in Singapore that produces high-end exercise equipment for U.S. consumers....
Crain Company has a manufacturing subsidiary in Singapore that produces high-end exercise equipment for U.S. consumers. The manufacturing subsidiary has total manufacturing costs of $1,600,000, plus general and administrative expenses of $360,000. The manufacturing unit sells the equipment for $2,600,000 to the U.S. marketing subsidiary, which sells it to the final consumer for an aggregate of $3,600,000. The sales subsidiary has total marketing, general, and administrative costs of $210,000. Assume that Singapore has a corporate tax rate of 33% and...
Shopwell is a U.K. grocery chain that is a subsidiary of Premium Products, a U.S. company....
Shopwell is a U.K. grocery chain that is a subsidiary of Premium Products, a U.S. company. Premium’s fiscal year ends January 31. On February 1, 2018, Shopwell’s inventory balance consisted of £100,000 purchased when the exchange rate was $1.20/£, and £300,000 purchased when the exchange rate was $1.23/£. Shopwell made purchases of £5,000,000 evenly throughout fiscal 2019, and its inventory on January 31, 2019, consisted of £350,000 purchased when the exchange rate was $1.29/£. Shopwell’s sales of inventory occurred relatively...
Shopwell is a U.K. grocery chain that is a subsidiary of Premium Products, a U.S. company....
Shopwell is a U.K. grocery chain that is a subsidiary of Premium Products, a U.S. company. Premium’s fiscal year ends January 31. On February 1, 2018, Shopwell’s inventory balance consisted of £100,000 purchased when the exchange rate was $1.20/£, and £300,000 purchased when the exchange rate was $1.23/£. Shopwell made purchases of £5,000,000 evenly throughout fiscal 2019, and its inventory on January 31, 2019, consisted of £350,000 purchased when the exchange rate was $1.29/£. Shopwell’s sales of inventory occurred relatively...
Darvish Company is a European subsidiary of Cubbie Corporation, a U.S. company. Darvish had the following...
Darvish Company is a European subsidiary of Cubbie Corporation, a U.S. company. Darvish had the following balance sheet at December 31, 20X1: (in millions of euros) Cash € 50 Accounts receivable 75 Inventory 120 Fixed assets, net of accumulated depreciation 480 Total assets € 725 Note payable € 280 Common equity 445 Total liabilities and equity € 725 There are no differences between local GAAP and U.S. GAAP for Darvish. Cubbie translates Darvish’s financial statements into U.S. dollars using the...
Darvish Company is a European subsidiary of Cubbie Corporation, a U.S. company. Darvish had the following...
Darvish Company is a European subsidiary of Cubbie Corporation, a U.S. company. Darvish had the following balance sheet at December 31, 20X1: (in millions of euros) Cash € 50 Accounts receivable 75 Inventory 120 Fixed assets, net of accumulated depreciation 480 Total assets € 725 Note payable € 280 Common equity 445 Total liabilities and equity € 725 There are no differences between local GAAP and U.S. GAAP for Darvish. Cubbie translates Darvish’s financial statements into U.S. dollars using the...
Ealing Company began operations as a new subsidiary of Fundamental Company, a U.S. Corporation, on January...
Ealing Company began operations as a new subsidiary of Fundamental Company, a U.S. Corporation, on January 2, 2018, by issuing common stock for 180,000 foreign currency units (FCU). Ealing immediately borrowed 35,000 FCU with a 10-year, 10% note, interest payable annually on January 1. On the same date, Ealing bought a building for 200,000 FCU. The building was to be depreciated for 20 years on a straight-line basis with a residual value of 40,000 FCU. During the year, the building...
Ealing Company began operations as a new subsidiary of Fundamental Company, a U.S. Corporation, on January...
Ealing Company began operations as a new subsidiary of Fundamental Company, a U.S. Corporation, on January 2, 2018, by issuing common stock for 180,000 foreign currency units (FCU). Ealing immediately borrowed 35,000 FCU with a 10-year, 10% note, interest payable annually on January 1. On the same date, Ealing bought a building for 200,000 FCU. The building was to be depreciated for 20 years on a straight-line basis with a residual value of 40,000 FCU. During the year, the building...
The Williams Company, a U.S.-based company, owns 100% of a European Subsidiary (ES). The investment in...
The Williams Company, a U.S.-based company, owns 100% of a European Subsidiary (ES). The investment in ES totals $10 million (euros 13.5 million) as of the end of Year 1. This represents an initial investment of $6 million and retained earnings of $4 million. The Currency Translation Adjustment (CTA) account included in Other Comprehensive Income (OCI) totals $1 million (loss) at the end of Year 1. During Year 2, Williams decided to sell 25% of ES to the Tremont Company,...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT