Ganado Europe (B). Using facts in the chapter for Ganado Europe, assume that the exchange rate on January 2, 2016, in Exhibit 11.6 dropped in value from $1.2000/€ to $0.9000/E. Recalculate Ganado Europe's translated balance sheet for January 2, 2016, with the new exchange rate using the temporal rate method as shown in the popup window, E. a. What is the amount of translation gain or loss? b. Where should it appear in the financial statements? c. Why does the translation loss or gain under the temporal method differ from the loss or gain under the current rate method? a. What is the amount of translation gain or loss? Enter a positive number for a gain and negative for a loss. $I (Round to the nearest dollar.)
Ganado Europe (B). Using facts in the chapter for Ganado Europe, assume that the exchange rate on January 2, 2016, in Exhibit 11.6 dropped in value from $1.2000/€ to $0.9000/E. Recalculate Ganado Europe's translated balance sheet for January 2, 2016, with the new exchange rate using the temporal rate method as shown in the popup window, E. a. What is the amount of translation gain or loss? b. Where should it appear in the financial statements? c. Why does the translation loss or gain under the temporal method differ from the loss or gain under the current rate method? a. What is the amount of translation gain or loss? Enter a positive number for a gain and negative for a loss. $I (Round to the nearest dollar.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![**Ganado Europe (B):** Using facts from the chapter for Ganado Europe, assume that the exchange rate on January 2, 2016, in Exhibit 11.6 dropped in value from $1.2000/€ to $0.9000/€. Recalculate Ganado Europe's translated balance sheet for January 2, 2016, with the new exchange rate using the temporal rate method as shown in the popup window.
1. **a.** What is the amount of translation gain or loss?
2. **b.** Where should it appear in the financial statements?
3. **c.** Why does the translation loss or gain under the temporal method differ from the loss or gain under the current rate method?
---
### a. What is the amount of translation gain or loss?
Enter a positive number for a gain and negative for a loss.
$ [Input box]
**(Round to the nearest dollar.)**
---
There is a blue link labeled **(Round to the nearest dollar.)** above the input box for providing the calculated amount.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F20bf0873-ce5f-49f4-a4c8-d91249e00b48%2F7f525139-2784-488e-9b01-3ed8a02e2ded%2Fp6q7saj_processed.png&w=3840&q=75)
Transcribed Image Text:**Ganado Europe (B):** Using facts from the chapter for Ganado Europe, assume that the exchange rate on January 2, 2016, in Exhibit 11.6 dropped in value from $1.2000/€ to $0.9000/€. Recalculate Ganado Europe's translated balance sheet for January 2, 2016, with the new exchange rate using the temporal rate method as shown in the popup window.
1. **a.** What is the amount of translation gain or loss?
2. **b.** Where should it appear in the financial statements?
3. **c.** Why does the translation loss or gain under the temporal method differ from the loss or gain under the current rate method?
---
### a. What is the amount of translation gain or loss?
Enter a positive number for a gain and negative for a loss.
$ [Input box]
**(Round to the nearest dollar.)**
---
There is a blue link labeled **(Round to the nearest dollar.)** above the input box for providing the calculated amount.
Transcribed Image Text:**Exhibit 11.6**: Ganado Europe's Translation Loss After Depreciation of the Euro: Temporal Method
### December 31, 2015
- **Assets**
- **Cash**: €1,600,000 | Exchange Rate: 1.2000 | Translated: $1,920,000
- **Accounts Receivable**: €3,200,000 | Exchange Rate: 1.2000 | Translated: $3,840,000
- **Inventory**: €2,400,000 | Exchange Rate: 1.2180 | Translated: $2,923,200
- **Net Plant and Equipment**: €4,800,000 | Exchange Rate: 1.2760 | Translated: $6,124,800
- **Total Assets**: €12,000,000 | Translated: $14,808,000
- **Liabilities and Net Worth**
- **Accounts Payable**: €800,000 | Exchange Rate: 1.2000 | Translated: $960,000
- **Short-term Bank Debt**: €1,600,000 | Exchange Rate: 1.2000 | Translated: $1,920,000
- **Long-term Debt**: €1,600,000 | Exchange Rate: 1.2000 | Translated: $1,920,000
- **Common Stock**: €1,800,000 | Exchange Rate: 1.2760 | Translated: $2,296,800
- **Retained Earnings**: €6,200,000 | Exchange Rate: 1.2437 | Translated: $7,711,200
- **Translation Gain (Loss)**: —
- **Total Liabilities and Net Worth**: €12,000,000 | Translated: $14,808,000
### January 2, 2016
- **Assets**
- **Cash**: €1,600,000 | Exchange Rate: 0.9000 | Translated: $1,440,000
- **Accounts Receivable**: €3,200,000 | Exchange Rate: 0.9000 | Translated: $2,880,000
- **Inventory**: €2,400,000 |
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