Foreign currency-hypothetical facts

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Reference no: EM131499671

Foreign currency

RadioShack had a subsidiary in Japan named RadioShack Global Sourcing Ltd. Assume the following hypothetical facts:

RadioShack Global Sourcing Ltd. had 100,000,000 yen in its bank account at 12/31/14. The exchange rate at 12/31/14 was 120 yen = $1.

RadioShack Global Sourcing Ltd. had 100,000,000 yen in its bank account at 12/31/15. The exchange rate at 12/31/15 was 110 yen = $1.

Questions:

When preparing its consolidated financial statements, how much cash in U.S. dollars will RadioShack record for its yen balances at RadioShack Global Sourcing Ltd at 12/31/14 and 12/31/15?

In translating the yen into U.S. dollars in 2015, will RadioShack experience a translation gain or loss? What is the amount of the gain or loss?

If the translation at 12/31/15 produces a translation gain or loss, where will this gain or loss be reflected in RadioShack’s 12/31/15 financial statements?

Reference no: EM131499671

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