Betancourt International has operations in Arrakis. The balance sheet for this d

Question

Betancourt International has operations in Arrakis. The balance sheet for this division in Arrakeen solaris shows assets of 34,000 solaris, debt in the amount of 13,000 solaris, and equity of 21,000 solaris.

If the current exchange ratio is 1.44 solaris per dollar, what does the balance sheet look like in dollars?

b. Assume that one year from now the balance sheet in solaris is exactly the same as at the beginning of the year. If the exchange rate is 1.59 solaris per dollar, what does the balance sheet look like in dollars now? (Use same balance sheet format as one above)

c. Assume that one year from now the balance sheet in solaris is exactly the same as at the beginning of the year. If the exchange rate is 1.29 solaris per dollar, what does the balance sheet look like in dollars now? (same balance sheet format)

If the current exchange ratio is 1.44 solaris per dollar, what does the balance sheet look like in dollars?

Explanation / Answer

A./

ASSETS   AMOUNT($)   LIBALITY     AMOUNT($)

ASSETS (34000 /1.44) 23611.11 DEBT (13000 / 1.44) 9027.78

EQUITY (21000 / 1.44) 14583.33

TOTAL ASSET 23611.11 TOTAL LIBALITY 23611.11

B./

   ASSETS   AMOUNT($)   LIBALITY   AMOUNT($)

ASSETS (34000 /1.44) 23611.11 DEBT (13000 / 1.59) 8176.10

EQUITY (21000 / 1.44) 14583.33

FORIGHN EXCHANGE LIBALITY 851.68

TOTAL ASSET 23611.11 TOTAL LIBALITY 23611.11

C./

   ASSETS AMOUNT($)   LIBALITY     AMOUNT($)

ASSETS (34000 /1.44) 23611.11 DEBT (13000 / 1.29) 10077.52

FOREIGN CURRENCY ASSET 1049.74 EQUITY (21000 / 1.44) 14583.33

TOTAL ASSET 24660.85 TOTAL LIBALITY 24660.85

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