A foreign subsidiary of Dallas Jeans Corp. (a U.S. firm) has certain balance sheet accounts on December 31, 20X9. The functional currency is the U.S. dollar and currency of record is the peso and the parent's books are kept in U.S. dollars. Information relating to these accounts in U.S. dollars is as follows: What amount should be included as total assets on Dallas Jean's balance sheet on December 31, 20X9 as the result of the above information?

Question

A foreign subsidiary of Dallas Jeans Corp. (a U.S. firm) has certain balance sheet accounts on December 31, 20X9. The functional currency is the U.S. dollar and currency of record is the peso and the parent's books are kept in U.S. dollars. Information relating to these accounts in U.S. dollars is as follows:  What amount should be included as total assets on Dallas Jean's balance sheet on December 31, 20X9 as the result of the above information?

Quizplus · Accepted Answer

We need to convert the peso balances to U.S. dollars using the exchange rate of 0.077.

Cash: $100,000 x 0.077 = $7,700 
Accounts Receivable: $200,000 x 0.077 = $15,400 
Inventory: $200,000 x 0.077 = $15,400 
Property, Plant, and Equipment: $400,000 x 0.077 = $30,800

Total assets in U.S. dollars: 
$7,700 + $15,400 + $15,400 + $30,800 = $69,300

Add to this the U.S. dollar balances of the two remaining accounts: 
Investment in Subsidiary (already in dollars) = $600,000 
Goodwill (already in dollars) = $100,000

Total assets in U.S. dollars = $69,300 + $600,000 + $100,000 = $770,000

A Foreign Subsidiary of Dallas Jeans Corp