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	€(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 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	$1.30
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

Required

a. Prepare a schedule to compute Amcrest’s 2020 remeasurement gain or loss, assuming Amcrest’s functional currency is the U.S. dollar.

Instructions:

1. Use negative signs with answers to indicate a negative exposed position balance.
2. Use negative signs with answers to indicate an amount that reduces the exposed position balance.
3. Using the drop-down menu, select the appropriate answer to indicate a remeasurement gain or remeasurement loss.
4. Do not use a negative sign with your remeasurement gain or remeasurement loss answer.
5. Enter answers in millions.

(in millions)		€	$/€	$
2020 beginning exposed position		Answer	Answer	Answer
Sales		Answer	Answer	Answer
Purchases		Answer	Answer	Answer
Cash operating expenses		Answer	Answer	Answer
Dividends		Answer	Answer	Answer
				Answer
2020 ending exposed position		Answer	Answer	Answer
Answer

Answer

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

Instructions:

1. Use negative signs with answers to indicate a negative exposed position balance.
2. Use negative signs with answers to indicate an amount that reduces the exposed position balance.
3. Using the drop-down menu, select the appropriate answer to indicate a remeasurement gain or remeasurement loss.
4. Do not use a negative sign with your translation gain or translation loss answer.
5. Enter answers in millions.

(in millions)		€	$/€	$
2020 beginning exposed position		Answer	Answer	Answer
Net income		Answer	Answer	Answer
Dividends		Answer	Answer	Answer
				Answer
2020 ending exposed position		Answer	Answer	Answer
Answer

Answer