Question #96
Reading: Reading 10 Multinational Operations
PDF File: Reading 10 Multinational Operations.pdf
Page: 53
Status: Unattempted
Part of Context Group: Q96-98
First in Group
Shared Context
Question
The currency translation adjustment that results from the translation of South Sea's data is closest to?
Answer Choices:
A. Zero because there is no currency translation adjustment under the current rate method
B. −3,300 USD
C. 21,600 USD
Explanation
LC
Conversion
USD
Cash
25,000
/2.00
12,500
current rate
Accounts Receivable
30,000
/2.00
15,000
current rate
Inventory
35,000
/2.00
17,500
current rate
Net Fixed Assets
500,000
/2.00
250,000
current rate
Total Assets
590,000
295,000
Accounts Payable
20,000
/2.00
10,000
current rate
Long Term Debt
100,000
/2.00
50,000
current rate
Common Stock
250,000
/2.50
100,000
historical rate
Retained Earnings
220,000
113,364
Note 1
Translation Adjustment
21,636
plug
Total Liabilities &
Equity
590,000
295,000
Note 1: Ending RE = Beginning RE (given USD 90,000) + NI (calculated 31,364) – Div
(16000/2 = 8000) = USD 113364