Prepare consolidated balance sheets for Carolina Fabrics and Cuzco Carpet, both before and after a…

Cuzco Carpets, S.A is the Carpets, SA., is the Peruvian subsidiary of the U.S. firm, Carolina Fabrics, Inc. Cuzco Carpets manufactures high-quality carpets from llama wool and sells its finished carpets to its U.S. parent. The rate of exchange between the Peruvian new sole and thy dollar is NS320004. This is also the historic rate at which feted assets and inventory were purchased and at which capita] stock was issued. Unconsolidated balance sheets for both parent and subsidiary

are as follows:

Carolina

fabrics cuzco

Carper;

kern

Cash

$2,880,000

NS 32.000,000

Accounts receivable

5,600,000

40.000,0000

inventory

7,320,000

48,000,000

Net plant $ equipment

24,000,000

60,000.000

investment in Cuzco Carpets

14.200,000

Liabilities and nets Worth

$54.000.000

N41800000,000

Accounts payable

$10,000,000"

NS36,1100,000

Accrued wages

6,000,000

34,$60,000

Long-term de hi

18.000,000

64,000,000

Capital stock

14,000,000

3,840,000

6O00,0 00

41.000,000

854,000,000

NS I 80,000.1100

a. Does c:arolilla Fabrics have any transaction exposure? If so, where and how nuts- 115 What would be the effect Should the new col devalue from NS3,2/4 NS-LO/4?

b. does Carlonia.) Fabrics have any translation exposure? If so, where and how much? What would Had be the effect should the new Sol devalue from NS32/$ to NS4.0/$?

C. Prepare consolidated balance sheets for Carolina Fabrics and Cuzco Carpet, both before and after a devaluation from NS3,2/$ to NS4.0/$ Use the current rate method.