Question: Tristan Narvaja, S.A. (A). Tristan Narvaja, S.A., is the Uruguayan subsidiary of a U.S. manufacturing company. Its balance sheet for January 1 follows. The January 1 exchange rate between the U.S. dollar and the peso Uruguayo ($U) is $U20/$. Determine Tristan Narvaja's contribution to the translation exposure of its parent on January 1, using the current rate method.
a. Determine Montevideo's contribution to the translation exposure of its parent on January 1st, using the current rate method.
b. Calculate Montevideo's contribution to its parent's translation loss if the exchange rate on December 31st is $U20/US$. Assume all peso Uruguayo accounts remain as they were at the beginning of the year.