Balaji Corporation of India is an 80 percent-owned subsidiary of Porter Corporat
ID: 2432799 • Letter: B
Question
Balaji Corporation of India is an 80 percent-owned subsidiary of Porter Corporation, a U.S. firm, and its functional currency is the Indian Rupees. Balaji’s books of record are maintained in Rupees and its inventory is carried at the lower of cost or market.
The current exchange rate rupees at Dec. 31, 19X8 is $.48
The historical cost of the inventory is 12,000 Rupees.
The market value of the inventory is 11,000 Rupees.
The historical exchange rate is $.43. The $ amount of inventory that will be reported in the translated statement is:
12,000 * $.48 = $ 5,760
11,000 * $.48 = $ 5,280
12,000 * $.43 = $ 5,160
11,000 * $.43 = $ 4,730
a.12,000 * $.48 = $ 5,760
b.11,000 * $.48 = $ 5,280
c.12,000 * $.43 = $ 5,160
d.11,000 * $.43 = $ 4,730
Explanation / Answer
Answer is option (b). 11000 * $.48 = $5280
Explanation;
As per information of the question, inventory will be recorded at lower of cost or market price. Thus lower of cost or market price is 11000
Current exchange rate rupees at Dec. 31, 19X8 is $.48
So, The $ amount of inventory that will be reported in the translated statement is (11000 * $.48) = $5280
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