Question

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 reported in euros. Assume that the following data relate to Amcrest’s activities for 2020 (in millions).

Net monetary liabilities, beginning of year                                                    Euros(15,000)

Net assets, beginning of year                                                                                     5,400   

Transactions during 2020:

            Sales                                                                                                                72,000

            Inventory purchases                                                                                       59,000

            Depreciation and amortization                                                                      1,000

            Cost of sales                                                                                                   61,000

            Cash of operating expenses                                                                           9,500

            Dividends declared and paid                                                                          100      

            New long-term interest borrowings                                                               300                  

Sales, inventory purchases, and cash operating expenses were reported evenly throughout the year. Exchange rates are as follows:

Beginning of 2020                                                                                                                   $1.3

Average for 2020                                                                                                                    1.24

End of 2020                                                                                                                             1.20

Rate when assets related to depreciation and amortization were acquired                         1.45

Rate when dividends declared                                                                                               1.21

Rate when long-term interest borrowings occurred                                                              1.25

b. Prepare a schedule to compute Amcrest’s 2020 translation gain or loss, assuming Amcrest’s functional currency is the euro.

Answer 1

Answer:

Sheduel showing computation of gain and loss ($)

sales(72000*1.24) 89280

cost of sales(61000*1.24) (75640)

depreciation and amortization (1000*1.45) (1450)

cash operation expenses(9500*1.24) (11780)

dividend declared (1.21*100) (121)

finance cost (300*1.25) (375)

Gain/ (loss) ( 86 )

sheduel showing gain and loss in (ero)

sales 72000

cost of sales 61000

depreciation and amortization 1000

dividend declared 100

cost and operatig cash expenses 9500

finance cost 300

net gain and loss 100