Ch10_SSol - 540,000 $27,000 Less exposed liabilities (curr...

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Problem 10.3 Montevideo Products, S.A. (A) Balance Sheet (thousands of pesos Uruguayo, $U) Exchange Rate Assets January 1st ($U/US$) Cash 60,000 20.00 Accounts receivable 120,000 20.00 Inventory 120,000 20.00 240,000 20.00 540,000 Current liabilities 30,000 20.00 Long-term debt 90,000 20.00 Capital stock 300,000 15.00 Retained earnings 120,000 15.00 540,000 January 1st $U/US$ Calculation of Accounting Exposures: $U (000s) 20.00 Exposed assets (all assets)
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Unformatted text preview: 540,000 $27,000 Less exposed liabilities (curr liabs + lt debt) (120,000) (6,000) Net exposure 420,000 $21,000 Montevideo Products, S.A., is the Uruguayan subsidiary of a U.S. manufacturing company. Its balance sheet for January 1 follows. The January 1st exchange rate between the U.S. dollar and the peso Uruguayo ($U) is $U20/$. Determine Montevideo’s contribution to the translation exposure of its parent on January 1, using the current rate method....
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This note was uploaded on 07/27/2011 for the course ECON 101 taught by Professor Dr. during the Spring '11 term at Columbia Union.

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