translate the chinese dollar balance sheet of shanghai corporation into u s dollars 543800
Shanghai Corporation, the Chinese affiliate of
a U.S. manufacturer, has the balance sheet shown below. The current exchange rate is $.0.15 = CNY1.
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translate the chinese dollar balance sheet of shanghai corporation into u s dollars 543800
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|
Balance Sheet of Shanghai Corporation (000’s) |
|||
|
Assets |
Liabilities |
||
|
Cash |
CNY 5,000 |
Accounts payable |
CNY21,000 |
|
Accounts receivable |
14,000 |
Long-term debt |
27,000 |
|
Inventoriesa (cost = 24,000) |
22,000 |
||
|
Fixed assets, net |
39,000 |
Stockholders’ equity |
32,000 |
|
Total assets |
CNY80,000 |
Total liab & SE |
CNY80,000 |
Required:
a. Translate the Chinese dollar balance sheet of Shanghai Corporation into U.S. dollars at the current exchange rate of $.0.15 12 = CNY1. All monetary accounts in Shanhai’s balance sheet are denominated in Chinese yuan.
b. Assume the Chinese yuan revalues from $0.15 = CNY1 to $0.1875 = CNY1. What would be the translation effect if Shanghai’s balance sheet is translated by the current–noncurrent method? By the monetary-nonmonetary method?
c. Assume instead that the Chinese yuan weakens from $0.15 = CNY1 to $0.1125 = CNY1. What would be the translation effect under each of the two translation methods?
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