Shanghai Corporation, the Chinese affiliate of a U.S manufacturer, has the balance sheet shown below. The current exchange rate is $0.2= CYN1. Balance sheet of shanghai: assets Liabilities and Stockholders’ equity Cash CNY 5,000 Accounts receivables 14,000 Inventories 22,000 Fixed assets net 39,000 Total assets CNY 80,000 Accounts payable CNY 21,000 Long-term debt 27,000 Stockholders’ equity 32,000 Total Liabilities & Stockholders’ equity CNY80,000 Required: 1. If the Chinese Yuan appreciate by 30%, what would be the translation effects under temporal method? 2. If the Chinese Yuan depreciated by 20%, what would be the translation effects under current non-current method?
Shanghai Corporation, the Chinese affiliate of a U.S manufacturer, has the balance sheet shown below. The current exchange rate is $0.2= CYN1. Balance sheet of shanghai: assets Liabilities and Stockholders’ equity Cash CNY 5,000 Accounts receivables 14,000 Inventories 22,000 Fixed assets net 39,000 Total assets CNY 80,000 Accounts payable CNY 21,000 Long-term debt 27,000 Stockholders’ equity 32,000 Total Liabilities & Stockholders’ equity CNY80,000 Required: 1. If the Chinese Yuan appreciate by 30%, what would be the translation effects under temporal method? 2. If the Chinese Yuan depreciated by 20%, what would be the translation effects under current non-current method?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Shanghai Corporation, the Chinese affiliate of a U.S manufacturer, has the balance sheet shown below. The current exchange rate is $0.2= CYN1.
Balance sheet of shanghai:
assets
Liabilities and Stockholders’ equity
Cash CNY 5,000
Accounts receivables 14,000
Inventories 22,000
Fixed assets net 39,000
Total assets CNY 80,000
Accounts payable CNY 21,000
Long-term debt 27,000
Stockholders’ equity 32,000
Total Liabilities & Stockholders’ equity CNY80,000
Required:
1. If the Chinese Yuan appreciate by 30%, what would be the translation effects under temporal method?
2. If the Chinese Yuan depreciated by 20%, what would be the translation effects under current non-current method?
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