Problem:
Translation of financial statements A U.S.-based MNC has a subsidiary in France (local currency, euro, ;). The balance sheet and income statement of the subsidiary follow. On 12/31/09, the exchange rate is US$1.20/;. Assume that the local (euro) figures for the statements remain the same on 12/31/10. Calculate the U.S. dollar translated figures for the two ending time periods, assuming that between 12/31/09 and 12/31/10 the euro has appreciated against the U.S. dollar by 6%.
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Translation of Income Statement
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12/31/09
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12/31/10
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Euro
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US$
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US$
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Sales
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30,000.00
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Cost of goods sold
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29,750.00
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Operating profits
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250.00
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Translation of Balance Sheet
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12/31/09
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12/31/10
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Assets
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Euro
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US$
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US$
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Cash
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40.00
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Inventory
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300.00
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Plant and equipment (net)
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160.00
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Total
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500.00
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Liabilities and Stockholder's Equity
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Debt
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240.00
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Paid-in capital
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200.00
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Retained earnings
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60.00
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Total
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500.00
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