In 1995,Ajax Manufacturing's German subsidiary has the following balance sheet:
Suppose the DM appreciates from $0.70 to $0.76 during the period.
-Under the current rate method,what is Ajax's translation gain loss.?
A)a gain of $294,000
B)a gain of $192,000
C)a loss of $174,000
D)a loss of $12,000

Question

In 1995,Ajax Manufacturing's German subsidiary has the following balance sheet:
  Suppose the DM appreciates from $0.70 to $0.76 during the period.
-Under the current rate method,what is Ajax's translation gain loss.?
A)a gain of $294,000 
B)a gain of $192,000 
C)a loss of $174,000 
D)a loss of $12,000

Quizplus · Accepted Answer

Under the current rate method, all assets and liabilities are translated at the current exchange rate. The translation gain or loss is reported in the equity section of the balance sheet as part of accumulated other comprehensive income. The specific gain or loss amount (e.g., $294,000) would depend on the changes in exchange rates and the specific amounts of assets and liabilities being translated. Without specific numbers regarding exchange rates and the values of assets and liabilities, the correct answer cannot be determined through calculation here, but the concept is that translation gains or losses reflect the impact of exchange rate changes on the company's financial statements.

In 1995,Ajax Manufacturing's German Subsidiary Has the Following Balance Sheet