Now assume that Majikstan Enterprises is a foreign subsidiary of a U.S.-based multinational corporation and that its financial statements are consolidated with those of its U.S. parent. Relevant exchange rate and
|
Exchange rate: |
General Price Level Index: |
||
|
Majikstan |
U.S. |
||
|
12/31/2010 |
MJR 4,400 = $1 |
30,000 |
281.5 |
|
Average 2011 |
MJR 4,800 = $1 |
32,900 |
292.5 |
|
12/31/2011 |
MJR 5,290 = $1 |
36,000 |
303.5 |
Required: What would be the increase in the current cost of Majikstan Enterprise’s equipment, net of inflation, when expressed in U.S. dollars under the restate-translate methodology? Under the translate restate method?