Question 18 (3 points) Assume that the foreign subsidiary\'s functional currency
ID: 2404171 • Letter: Q
Question
Question 18 (3 points)
Assume that the foreign subsidiary's functional currency is US dollar. What amounts (in US$) should appear on ABC Inc.'s consolidated financial statements for cash related to its foreign subsidiary?
Question 18 options:
$12,996
$12,540
$12,844
$12,464
Question 19 (3 points)
Assume that the foreign subsidiary's functional currency is US dollar. What amounts (in US$) should appear on ABC Inc.'s consolidated financial statements for land related to its foreign subsidiary?
Question 19 options:
$5,775
$5,985
$5,740
$5,600
Question 18 (3 points)
Assume that the foreign subsidiary's functional currency is US dollar. What amounts (in US$) should appear on ABC Inc.'s consolidated financial statements for cash related to its foreign subsidiary?
Question 18 options:
$12,996
$12,540
$12,844
$12,464
Question 19 (3 points)
Assume that the foreign subsidiary's functional currency is US dollar. What amounts (in US$) should appear on ABC Inc.'s consolidated financial statements for land related to its foreign subsidiary?
Question 19 options:
$5,775
$5,985
$5,740
$5,600
Explanation / Answer
In the given case, the transactional currency is different from the functional currency, in order to convert the amounts into the reporting currency (US$), we need to remeasure the amounts as the functional currency is also US$.
1. Amount of cash on consolidated financial statements:
Monetary Items are converted at the Year-end rate.
Therefore, Cash in consolidated statements = 7,600 x $1.65 = $12,540
Therefore, Option B is correct option.
2. Amount of Land in consolidated financial statements:
SInce Land is a Non-Monetary asset, it is to be converted at Historical rate.
Amount = 3,500 x $1.71 = $5,985
Therefore, Option B is correct answer.
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