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EXHIBIT 11.5 Ganado Europe's Translation Loss After Depreciation of the Euro: Current Rate Method December 31, 2015 January 2, 2016 Exchange Rate (USSleuro) 1.2800 Translated Exchange Rate (US$leuro) 0.9700 Translated In Euros (€) Accounts (US$) Accounts (US$) Assets Cash 1,600,000 2,800,000 2,300,000 5,100,000 11,800,000 $2,048,000 3,584,000 $1,552,000 Accounts receivable 1.2800 0.9700 2,716,000 1.2800 0.9700 Inventory Net plant and equipment Total 2,944,000 2,231,000 1.2800 6,528,000 0.9700 4,947,000 $15,104,000 $11,446,000 Liabilities and Net Worth 900,000 1.2800 $1,152,000 0.9700 $873,000 1,261,000 1,552,000 Accounts payable Short-term bank debt 1,300,000 1.2800 1,664,000 0.9700 1,600,000 2,100,000 Long-term debt 1.2800 2,048,000 0.9700 Common stock 1.3370 2,807,700 1.3370 2,807,700 Retained earnings Translation adjustment (CTA) 5,900,000 1.2800 (a) 7,552,000 1.2800 (b) 7,552,000 (119,700) (2,599,700) Total 11,800,000 $15,104,000 $11,446,000 (a) Dollar retained earnings before depreciation are the cumulative sum of additions to retained earnings of all prior years, translated to exchange rates in each year. (b) Translated into dollars at the same rate as before depreciation of the euro. Click on the icon located on the top-right corner of the data table in order to copy its contents into a spreadsheet.

EXHIBIT 11.5 Ganado Europe's Translation Loss After Depreciation of the Euro: Current Rate Method December 31, 2015 January 2, 2016 Exchange Rate (USSleuro) 1.2800 Translated Exchange Rate (US$leuro) 0.9700 Translated In Euros (€) Accounts (US$) Accounts (US$) Assets Cash 1,600,000 2,800,000 2,300,000 5,100,000 11,800,000 $2,048,000 3,584,000 $1,552,000 Accounts receivable 1.2800 0.9700 2,716,000 1.2800 0.9700 Inventory Net plant and equipment Total 2,944,000 2,231,000 1.2800 6,528,000 0.9700 4,947,000 $15,104,000 $11,446,000 Liabilities and Net Worth 900,000 1.2800 $1,152,000 0.9700 $873,000 1,261,000 1,552,000 Accounts payable Short-term bank debt 1,300,000 1.2800 1,664,000 0.9700 1,600,000 2,100,000 Long-term debt 1.2800 2,048,000 0.9700 Common stock 1.3370 2,807,700 1.3370 2,807,700 Retained earnings Translation adjustment (CTA) 5,900,000 1.2800 (a) 7,552,000 1.2800 (b) 7,552,000 (119,700) (2,599,700) Total 11,800,000 $15,104,000 $11,446,000 (a) Dollar retained earnings before depreciation are the cumulative sum of additions to retained earnings of all prior years, translated to exchange rates in each year. (b) Translated into dollars at the same rate as before depreciation of the euro. Click on the icon located on the top-right corner of the data table in order to copy its contents into a spreadsheet.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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EXHIBIT 11.5 Ganado Europe's Translation Loss After Depreciation of the Euro: Current Rate Method December 31, 2015 Translated Accounts (US$) January 2, 2016 Exchange Rate (US$leuro) Exchange Rate (US$leuro) 0.9700 Translated Assets In Euros (€) Accounts (US$) Cash $2,048,000 $1,552,000 2,716,000 1,600,000 1.2800 Accounts receivable 2,800,000 1.2800 3,584,000 0.9700 Inventory Net plant and equipment 2,300,000 1.2800 2,944,000 0.9700 2,231,000 5,100,000 1.2800 6,528,000 0.9700 4,947,000 Total 11,800,000 $15,104,000 $11,446,000 Liabilities and Net Worth Accounts payable 900,000 1.2800 $1,152,000 0.9700 $873,000 Short-term bank debt 1,300,000 1.2800 1,664,000 0.9700 1,261,000 Long-term debt 1,600,000 1.2800 2,048,000 2,807,700 0.9700 1,552,000 Common stock 1.3370 2,807,700 7,552,000 (2,599,700) 2,100,000 1.3370 1.2800 (a) Retained earnings Translation adjustment (CTA) 5,900,000 7,552,000 1.2800 (b) (119,700) Total 11,800,000 $15,104,000 $11,446,000 (a) Dollar retained earnings before depreciation are the cumulative sum of additions to retained earnings of all prior years, translated to exchange rates in each year. (b) Translated into dollars at the same rate as before depreciation of the euro. Click on the icon located on the top-right corner of the data table in order to copy its contents into a spreadsheet.
Transcribed Image Text:EXHIBIT 11.5 Ganado Europe's Translation Loss After Depreciation of the Euro: Current Rate Method December 31, 2015 Translated Accounts (US$) January 2, 2016 Exchange Rate (US$leuro) Exchange Rate (US$leuro) 0.9700 Translated Assets In Euros (€) Accounts (US$) Cash $2,048,000 $1,552,000 2,716,000 1,600,000 1.2800 Accounts receivable 2,800,000 1.2800 3,584,000 0.9700 Inventory Net plant and equipment 2,300,000 1.2800 2,944,000 0.9700 2,231,000 5,100,000 1.2800 6,528,000 0.9700 4,947,000 Total 11,800,000 $15,104,000 $11,446,000 Liabilities and Net Worth Accounts payable 900,000 1.2800 $1,152,000 0.9700 $873,000 Short-term bank debt 1,300,000 1.2800 1,664,000 0.9700 1,261,000 Long-term debt 1,600,000 1.2800 2,048,000 2,807,700 0.9700 1,552,000 Common stock 1.3370 2,807,700 7,552,000 (2,599,700) 2,100,000 1.3370 1.2800 (a) Retained earnings Translation adjustment (CTA) 5,900,000 7,552,000 1.2800 (b) (119,700) Total 11,800,000 $15,104,000 $11,446,000 (a) Dollar retained earnings before depreciation are the cumulative sum of additions to retained earnings of all prior years, translated to exchange rates in each year. (b) Translated into dollars at the same rate as before depreciation of the euro. Click on the icon located on the top-right corner of the data table in order to copy its contents into a spreadsheet.
Ganado Europe (A). Using facts in the chapter for Ganado Europe, assume the exchange rate on January 2, 2016, in Exhibit 11.5 dropped in value from $1.2800/€ to $0.9700/€. Recalculate Ganado Europe's translated balance sheet for January 2, 2016, with the new exchange rate using the current rate method as shown in the popup window, a. What is the amount of translation gain or loss? b. Where should it appear in the financial statements? ... a. What is the amount of translation gain or loss? Enter a positive number for a gain and negative for a loss. (Round to the nearest dollar.)
Transcribed Image Text:Ganado Europe (A). Using facts in the chapter for Ganado Europe, assume the exchange rate on January 2, 2016, in Exhibit 11.5 dropped in value from $1.2800/€ to $0.9700/€. Recalculate Ganado Europe's translated balance sheet for January 2, 2016, with the new exchange rate using the current rate method as shown in the popup window, a. What is the amount of translation gain or loss? b. Where should it appear in the financial statements? ... a. What is the amount of translation gain or loss? Enter a positive number for a gain and negative for a loss. (Round to the nearest dollar.)
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