A foreign operation has the following local inflation rates: Year 1: 10% Year 2: 20% Year 3: 30% Year 4: 10% Year 5: 15% a. What is the applicable cumulative inflation rate that should be used for reporting as of end of year 5? b. What method will be used for remeasurement or translation of the foreign operation’s foreign currency financial statements? ANSWER A AND B BOTH PLEASE 2. XYZ, a US company has a subsidiary in Korea. The Korean sub sells inventory to a Japanese company with the sale denominated in US dollars. Between the date of sale and the date, the receivable is collected the Korean won strengthens 10% against the US dollar. Explain if there is a foreign exchange gain or loss or no FX impact and why?
- A foreign operation has the following local inflation rates:
Year 1: 10% Year 2: 20% Year 3: 30% Year 4: 10% Year 5: 15%
a. What is the applicable cumulative inflation rate that should be used for reporting as of end of year 5?
b. What method will be used for remeasurement or translation of the foreign operation’s foreign currency financial statements?
ANSWER A AND B BOTH PLEASE
2. XYZ, a US company has a subsidiary in Korea. The Korean sub sells inventory to a Japanese company with the sale denominated in US dollars. Between the date of sale and the date, the receivable is collected the Korean won strengthens 10% against the US dollar. Explain if there is a foreign exchange gain or loss or no FX impact and why?
Answer 1 and 2 all
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