Identify couch potatos exposed asset and exposed liabilities

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Reference no: EM13871726

Finlandiva, a furniture manufacturer based in Finland, is owned by U.S.-based Couch Potato, Inc.. Finlandiva's balance sheet at the current exchange rate of $1.00/ is shown in the following table:

 

Assets

Value in C$

Value at         Value at     Translation C$1.60/$       C$1.50/$   gains  or losses

Cash & marketable securities

C$320,000

$200,000

Accounts receivable

C$160,000

$100,000

Inventory

C$640,000

$400,000

Plant and equipment

C$480,000

$300,000

Total assets

C$1,600,000

$1,000,000

Liabilities Accounts payable

C$320,000

$200,000

Wages payable

C$160,000

$100,000

Net worth

C$1,120,000

$700,000

Total liabilities & net worth

C$1,600,000

$1,000,000

 

a. Identify Couch Potato's exposed assets, exposed liabilities, and net exposed assets under FAS #52.

 

b. Identify the impact of a 20 percent depreciation of the euro on Couch Potato's consolidated balance sheet.

Reference no: EM13871726

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