Calculate the gain or loss from translation

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Reference no: EM133131782

Question: Bangkok Instruments, Ltd. (A). Bangkok Instruments, Ltd, the Thai subsidiary of a U.S. corporation, is a seis¬mic instrument manufacturer. Bangkok Instruments manufactures instruments primarily for the oil and gas industry globally, though with recent commodity price increases of all kinds-including copper-its business has begun to grow rapidly. Sales arc primarily to mul¬tinational companies based in the United States and Europe. Bangkok Instruments' balance sheet in thou¬sands of Thai baht (B) as of March 31 is as follows:

Bangkok Instruments. Ltd.

Balance Sheet, March 11, thousands of Thai bahts

Assets	Liabilities and Net Worth
		Accounts
Cash	B24,000	payable	1318.000
Accounts receivable	36.000	Bank loans	60,000
		Common
Inventory	48,000	stock	18,000

B30.00/$ March 31st exchange rate, before 25% devaluation. All inventory was acquired at this rate.
B20.00/$ Historic exchange rate at which plant and equipment were acquired.

The Thai baht dropped in value from B30/$ to B40/$ between March 31 and April 1. Assuming no change in balance sheet accounts between these two days. calculate the gain or loss from translation by both the current rate method and the temporal method. Explain the translation gain or loss in terms of changes in the value of exposed accounts.

Reference no: EM133131782

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