Quadros Inc., a Portugese firm was acquired by a U.S. company on January 1, 2010. Selected account balances are available for the year ended December 31, 2011, and are stated in euro, the local currency.
-Assume the functional currency is the euro, compute the U.S. balance sheet amount for inventory at December 31, 2011.

Question

Quadros Inc., a Portugese firm was acquired by a U.S. company on January 1, 2010. Selected account balances are available for the year ended December 31, 2011, and are stated in euro, the local currency. 
-Assume the functional currency is the euro, compute the U.S. balance sheet amount for inventory at December 31, 2011.

Quizplus · Accepted Answer

To calculate the U.S. balance sheet amount for inventory at December 31, 2011, we need to convert the euro balance into U.S. dollars using the exchange rate on December 31, 2011.

Inventory balance as of December 31, 2011 = 
€9,000 x $1.02 = $9,180

Therefore, the U.S. balance sheet amount for inventory at December 31, 2011 is $9,180 x 2.2 = $20,196 or $20,200 approx. 
Hence, the correct option is D.