The following is the balance sheet of Kingston Industries-Sweden, a wholly-owned

Question

The following is the balance sheet of Kingston Industries-Sweden, a wholly-owned subsidiary of Kingston Industries (USA), a manufacturer of electronic appliances.

According to this balance sheet, the exposed assets using the Current Rate Method is _______, and the exposed liabilities using the Current Rate Method is _________.

A. SEK 32.8 million / SEK 49.9 million Liabilities and Net Worth (in Million SEK) Accounts Payable Short-term Debt 3-year note Assets (in million SEK) 5.3 16.2 19.2 4.3 Accounts Receivable 12.9 Inventory 15.6 (Citibank-Sweden) Factory A (1973 3.8 8-year note (First 9.2 Swedish Bank) Factory B (1993)49.1 Capital Stock 35.8 85.7 85.7

Explanation / Answer

Current-Rate Method

All assets and liabilities are converted at the current rate of exchange on the date of the balance sheet.

So total exposed assets= Total assets = SEK 85.7 MILLION

Total exposed liabilities = Total liabilities - capital stock

=85.7 million - 35.8 million

= SEK 49.9 million

correct answer is

C. SEK 85.7 million / SEK 49.9 million

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