Certain balance sheet accounts of a foreign subsidiary of Parker Company at December 31, 2011, have been restated into U.S. dollars as follows: Assuming the functional currency of the subsidiary is the local currency, what total should be included in Parker's consolidated balance sheet at December 31, 2011, for the above items?

Question

Certain balance sheet accounts of a foreign subsidiary of Parker Company at December 31, 2011, have been restated into U.S. dollars as follows:  Assuming the functional currency of the subsidiary is the local currency, what total should be included in Parker's consolidated balance sheet at December 31, 2011, for the above items?

Quizplus · Accepted Answer

The total of the restated accounts is $418,000, which should be included in Parker's consolidated balance sheet at December 31, 2011. This is because the functional currency of the subsidiary is the local currency, and the restatement into U.S. dollars reflects the exchange rates at the balance sheet date. Therefore, the restated amounts should be used in the consolidation process.

Certain Balance Sheet Accounts of a Foreign Subsidiary of Parker