What would be the translation gain or loss

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Reference no: EM131325170

Manana SA is the Coluvian subsidiary of a US manufacturer. Its local currency balance sheet is shown below. The current exchange rate is 20 pesos to the US dollar.

Figures in million pesos
Shareholders' funds 42 Fixed assets 36
Long-term debt 9 Debtors 12
Current liabilities 3 Cash 6

54
54

(a) Translate the peso balance sheet of Manana SA into dollars at the existing exchange rate of 20 pesos to the dollar. All monetary items in Manana's balance sheet are denominated in pesos.

(b) If Manana's balance sheet remained as above but the peso moved to 25 pesos per dollar, what would be the translation gain or loss if translated by the monetary/ non-monetary method? By the current/non-current method? By the all-current rate method?

(c) If the peso moved to $0.06, what would be the translation gain or loss according to the three accounting translation methods referred to under (b)?

(d) What is Manana's translation exposure under the three accounting methods?

Reference no: EM131325170

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