Translation and Remeasurement Gains and Losses Amcrest France Sarl, located in Paris France, is a financial subsidiary of Target Corporation, a U.S. company. Amcrest's accounts are re- ported in euros. Assume that the following data relate to Amcrest's activities for 2020 (in millions). €(15,000) 5,400 Net monetary liabilities, beginning of year. Net assets, beginning of year.. Transactions during 2020: Sales.... 72,000 59,000 ...... Inventory purchases.. Depreciation and amortization Cost of sales..... Cash operating expenses.. Dividends declared and paid New long-term interest borrowings 1,000 61,000 9,500 100 300 Sales, inventory purchases, and cash operating expenses were reported evenly throughout the year. Exchange rates are as follows ($/€): Beginning of 2020 Average for 2020 End of 2020 $1.30 1.24 1.20 ... .. Rate when assets related to depreciation and amortization were acquired Rate when dividends declared...... Rate when long-term interest borrowings occurred 1.45 1.21 1.25 Required a. Prepare a schedule to compute Amcrest's 2020 remeasurement gain or loss, assuming Amcrest's functional currency is the U.S. dollar. b. Prepare a schedule to compute Amcrest's 2020 translation gain or loss, assuming Amcrest's func tional currency is the euro.
Translation and Remeasurement Gains and Losses Amcrest France Sarl, located in Paris France, is a financial subsidiary of Target Corporation, a U.S. company. Amcrest's accounts are re- ported in euros. Assume that the following data relate to Amcrest's activities for 2020 (in millions). €(15,000) 5,400 Net monetary liabilities, beginning of year. Net assets, beginning of year.. Transactions during 2020: Sales.... 72,000 59,000 ...... Inventory purchases.. Depreciation and amortization Cost of sales..... Cash operating expenses.. Dividends declared and paid New long-term interest borrowings 1,000 61,000 9,500 100 300 Sales, inventory purchases, and cash operating expenses were reported evenly throughout the year. Exchange rates are as follows ($/€): Beginning of 2020 Average for 2020 End of 2020 $1.30 1.24 1.20 ... .. Rate when assets related to depreciation and amortization were acquired Rate when dividends declared...... Rate when long-term interest borrowings occurred 1.45 1.21 1.25 Required a. Prepare a schedule to compute Amcrest's 2020 remeasurement gain or loss, assuming Amcrest's functional currency is the U.S. dollar. b. Prepare a schedule to compute Amcrest's 2020 translation gain or loss, assuming Amcrest's func tional currency is the euro.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Translation and Remeasurement Gains and Losses Amcrest France Sarl, located in Paris
France, is a financial subsidiary of Target Corporation, a U.S. company. Amcrest's accounts are re-
ported in euros. Assume that the following data relate to Amcrest's activities for 2020 (in millions).
€(15,000)
5,400
Net monetary liabilities, beginning of year.
Net assets, beginning of year..
Transactions during 2020:
Sales....
72,000
59,000
......
Inventory purchases..
Depreciation and amortization
Cost of sales.....
Cash operating expenses..
Dividends declared and paid
New long-term interest borrowings
1,000
61,000
9,500
100
300
Sales, inventory purchases, and cash operating expenses were reported evenly throughout the year.
Exchange rates are as follows ($/€):
Beginning of 2020
Average for 2020
End of 2020
$1.30
1.24
1.20
... ..
Rate when assets related to depreciation and amortization were acquired
Rate when dividends declared......
Rate when long-term interest borrowings occurred
1.45
1.21
1.25
Required
a. Prepare a schedule to compute Amcrest's 2020 remeasurement gain or loss, assuming Amcrest's
functional currency is the U.S. dollar.
b. Prepare a schedule to compute Amcrest's 2020 translation gain or loss, assuming Amcrest's func
tional currency is the euro.
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