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Scenario B: Assume the foreign currency depreciated relative to the US dollar. Use the following direct exchange rates and translate the account balances using the current rate and temporal methods.

January 1, 2021	$1.20
January 1, 2022	$1.10
Average rate for 2022	$1.00
December 31, 2022	$0.90

Foreign Co. Trial Balance December 31, 2022
	FCUs	Current Method	Temporal Method
Cash	10,000
Accounts Receivable	25,000
Inventory	50,000
Equipment*	100,000
Accumulated Depreciation	(10,000)
Accounts Payable	(20,000)
Long-term Debt	(60,000)
Sales Revenue	(100,000)
Cost of Goods Sold**	40,000
Salary Expense	30,000
Rent Expense	14,000

*Equipment was acquired on January 1, 2021

**COGS: beginning inventory of $60,000 was acquired when the exchange rate was $1.10. Ending inventory was acquired when the exchange rate was $0.90. Purchases of $30,000 were made evenly throughout the year, so assume an average exchange rate.

Based on the translation you just computed above, compute the following balances and ratios (round the ratios to two decimals).

	Current Rate Method	Temporal Method
Total Assets
Total Liabilities
Net Income
Debt-to-Assets ratio (total liabilities / total assets)
Return on Assets (net income / total assets)

Assume you are to provide advice to the controller. What concluding comments would you provide based on the firms financial data translated using both methods and stressed under two fluctuation scenarios?

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