Ă‚Â Bangkok Instruments, Ltd.(A). Bangkok Instruments, Ltd., the Thai subsidiary of a U.S. corporation, is a seismic instrument manufacturer. Bangkok Instruments manufactures the instruments primarily for the oil and gas industry globally, though with recent commodity price increases of all kindsĂ˘â‚¬â€ťincluding copperĂ˘â‚¬â€ťits business has begun to grow rapidly. Sales are primarily to multinational companies based in the United States and Europe. Bangkok InstrumentsĂ˘â‚¬â„˘ balance sheet in thousands of Thai bahts (B) as of MarchĂ‚Â 31 is as follows:
Exchange rates for translating Siam ToyĂ˘â‚¬â„˘s balance sheet into U.S. dollars are: B40.00/$ April 1st exchange rate after 25% devaluation. B30.00/$ March 31st exchange rate, before 25% devaluation. All inventory was acquired at this rate. B20.00/$ Historic exchange rate at which plant and equipment were acquired. The Thai baht dropped in value from B30/$ to B40/$ between March 31 and April 1. Assuming no change in balance sheet accounts between these two days, calculate the gain or loss from translation by both the current rate method and the temporal method. Explain the translation gain or loss in terms of changes in the value of exposed accounts.
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