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Trans-mediterranean aluminum using the current rate method

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Reference no: EM131448600

Bangkok Ingot, LTd is the Thai Subsidiary of Trans-Mediterranean Aluminum, a U.S. Multinational that fashions automobile engine block from aluminum. Bangkok Ingot's Dec 31 balance sheet measured in Thai Baht (THB) is shown below. At the date of this balance sheet the exchange rate between Thai Baht and U .S. dollar was 0.028/THB.

Assets:                                                                       Liabilities and Equity

Cash              5,000                                                   Long-Term Debt 40,000                                    

Accounts Rec 25,000                                               Equity                    45,000

Inventory 35,000                                                      Accounts Payable 25,000

Net Plant & Equip 45,000

Total Assets:   110,000                                           Total L&E       110,000

Assume that Bangkok Ingot's balance sheet does not change during the next year, but the exchange rate changes to 0.022/THB Calculate the translation exposure (gain/loss) to Trans-Mediterranean Aluminum using the current rate method. Treat 0.028/THB as also the historical exchange rate in this case. PLEASE SHOW ALL WORK.

Reference no: EM131448600

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