On January 2, 20X8, Johnson Company acquired a 100% interest in the capital stock of Perth Company for $3,100,000. Any excess cost over book value is attributable to a patent with a 10-year remaining life. At the date of acquisition, Perth's balance sheet contained the following information:
Perth's income statement for 20X8 is as follows:
The balance sheet of Perth at December 31, 20X8, is as follows:
Perth declared and paid a dividend of 20,000 FCU on October 1, 20X8. Spot rates at various dates for 20X8 follow:
Assume Perth's revenues, purchases, operating expenses, depreciation expense, and income taxes were incurred evenly throughout 20X8.

-Refer to the above information.Assuming the U.S.dollar is the functional currency,what is the amount of Perth's cost of goods sold remeasured in U.S.dollars?
A) $811,500
B) $843,500
C) $884,500
D) $799,500

Question

On January 2, 20X8, Johnson Company acquired a 100% interest in the capital stock of Perth Company for $3,100,000. Any excess cost over book value is attributable to a patent with a 10-year remaining life. At the date of acquisition, Perth's balance sheet contained the following information:
Perth's income statement for 20X8 is as follows:
   The balance sheet of Perth at December 31, 20X8, is as follows:
Perth declared and paid a dividend of 20,000 FCU on October 1, 20X8. Spot rates at various dates for 20X8 follow:
Assume Perth's revenues, purchases, operating expenses, depreciation expense, and income taxes were incurred evenly throughout 20X8.
  
-Refer to the above information.Assuming the U.S.dollar is the functional currency,what is the amount of Perth's cost of goods sold remeasured in U.S.dollars?
A) $811,500 
B) $843,500 
C) $884,500 
D) $799,500

Quizplus · Accepted Answer

The cost of goods sold is remeasured using the historical exchange rate applicable at the time of the transaction. The correct amount is $811,500.

On January 2, 20X8, Johnson Company Acquired a 100% Interest