Paragon U.S.'s Japanese subsidiary, Paragon Japan, has exposed assets of ¥8 billion and exposed liabilities of ¥6 billion. During the year, the yen appreciates from ¥125/$ to ¥95/$.
a. What is Paragon Japan's net translation exposure at the beginning of the year in yen? in dollars?
b. What is Paragon Japan's translation gain or loss from the change in the yen's value?
c. At the start of the next year, Paragon Japan adds exposed assets of ¥1.5 billion and exposed liabilities of ¥2 billion. During the year, the yen depreciates from ¥95/$ to ¥130/$. What is Paragon Japan's translation gain or loss for this year? What is its total translation gain or loss for the two years?