Ask Question
6 September, 11:23

If the European subsidiary of a U. S. firm has net exposed assets of euro 200,000, and the euro increases in value from $1.22/euro to $1.26/euro the U. S. firm has a translation: A. loss of $8,000. B. gain of $8,000. C. loss of euro 252,000. D. gain of $252,000.

+4
Answers (1)
  1. 6 September, 11:26
    0
    B. Gain $8,000

    Explanation:

    The calculation of exchange translation is shown below:-

    Old exchange rate = Net exposed assets * Value of Euro

    = 200,000 * $1.22

    = $244,000

    New value in euro = Net exposed assets * Increased exchange rate

    = 200,000 * $1.26

    = $252,000

    Translation Profit = New value in euro - Old exchange rate

    = $252,000 - $244,000

    = $8,000
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “If the European subsidiary of a U. S. firm has net exposed assets of euro 200,000, and the euro increases in value from $1.22/euro to ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers