Solved

A UK Subsidiary of a U

Question 87

Essay

A U.K. subsidiary of a U.S. parent reports the following information in its accounts:
•Beginning inventory, £14,000
•Purchases, £150,000
•Ending inventory, £16,000
The subsidiary uses FIFO, and its beginning inventory consists of £12,000 purchased when the exchange rate was $1.32/£, and £2,000 purchased when the exchange rate was $1.31/£. Purchases and sales of inventory occurred evenly throughout the year. The subsidiary's ending inventory consists of £13,000 purchased when the exchange rate was $1.28/£, and £3,000 purchased when the exchange rate was $1.27/£. The average exchange rate for the year was $1.29/£, and the rate at the end of the year was $1.26/£.
Required
a. Assume the subsidiary's functional currency is the pound. Calculate the subsidiary's translated ending inventory, and its translated cost of goods sold for the year.
b. Assume the subsidiary's functional currency is the U.S. dollar. Calculate the subsidiary's remeasured ending inventory, and its remeasured cost of goods sold for the year

Correct Answer:

verifed

Verified

None...

View Answer

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions

Unlock this Answer For Free Now!

View this answer and more for free by performing one of the following actions

qr-code

Scan the QR code to install the App and get 2 free unlocks

upload documents

Unlock quizzes for free by uploading documents