In 1995,Ajax Manufacturing's German Subsidiary Has the Following Balance Sheet

question 14

Multiple Choice

In 1995,Ajax Manufacturing's German subsidiary has the following balance sheet:
Suppose the DM appreciates from $0.70 to $0.76 during the period.
-Under the monetary/non-monetary method,what is Ajax's translation gain loss?

• A)a gain of $294,000
• B)a gain of $192,000
• C)a loss of $174,000
• D)a loss of $12,000

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Definitions:

Paper Money

Currency in the form of paper notes, issued by the government or central bank, representing a claim on the issuing country's government.

Gold

A precious metal that is used as an investment, a hedge against inflation, and in various industrial and jewelry applications, known for its value retention over time.

U.S. Currency

The money that is legally in use in the United States, consisting mainly of Federal Reserve Notes (dollar bills).

Federal Reserve

The central banking system of the United States, responsible for monetary policy, including regulation of money supply and interest rates.