please answer in text form and in proper format answer with must explanation , calculation for each part and steps clearly A U.S. company's foreign subsidiary had these amounts in local currency units (LCU) in 2024:Cost of goods soldBeginning inventoryEnding inventoryLCU 5,040,000542,000632,000The average exchange rate during 2024 was $2.00=LCU 1. The beginning inventory was acquired when the exchange rate was $1.80=LCU 1. Ending inventory was acquired when the exchange rate was $2.10-LCU 1. The exchange rate on December 31, 2024, was$2.15=LCU 1Required:Assuming that the foreign country is highly inflationary, determine the amount at which the foreign subsidiary's cost of goods soldshould be reflected in the U.S. dollar income statement.Cost of goods sold

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International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter10: Measuring Exposure To Exchange Rate Fluctuations

Section: Chapter Questions

Problem 22QA

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A U.S. company’s foreign subsidiary had these amounts in local currency units (LCU) in 2020: Cost of goods sold LCU 5,590,000 Beginning inventory 501,000 Ending inventory 604,000 The average exchange rate during 2020 was $1.50 = LCU 1. The beginning inventory was acquired when the exchange rate was $1.30 = LCU 1. Ending inventory was acquired when the exchange rate was $1.60 = LCU 1. The exchange rate at December 31, 2020, was $1.65 = LCU 1. Assuming that the foreign country is highly inflationary, at what amount should the foreign subsidiary’s cost of goods sold be reflected in the U.S. dollar income statement?
At the end of 2020, an Italian subsidiary of a U.S. parent reports €1,000,000 in equipment purchased when the exchange rate was $1.40, and €3,000,000 in equipment purchased when the exchange rate was $1.50. The average exchange rate for 2020 is $1.35, and the beginning and ending rates for 2020 are $1.42 and $1.31, respectively. If the Italian subsidiary’s functional currency is the U.S. dollar, the equipment account, in U.S. dollars, is a. $5,240,000 b. $5,350,000 c. $5,400,000 d. $5,900,000
A U.S. company’s foreign subsidiary had these amounts in local currency units (LCU) in 2017: Cost of goods sold . . . . LCU 5,000,000Beginning inventory . . . . . 500,000Ending inventory . . . . . . . . 600,000 The average exchange rate during 2017 was $1.00 = LCU 1. The beginning inventory was acquired when the exchange rate was $0.80 = LCU 1. Ending inventory was acquired when the exchange rate was $1.10 = LCU 1. The exchange rate at December 31, 2017, was $1.15 = LCU 1. Assuming that the foreign country is highly inflationary, at what amount should the foreign subsidiary’s cost of goods sold be reflected in the U.S. dollar income statement? Choose the correct.a. $4,440,000.b. $4,840,000.c. $5,000,000.d. $5,750,000.
A U.S. company’s foreign subsidiary had these amounts in local currency units (LCU) in 2017:The average exchange rate during 2017 was $1.00 = LCU 1. The beginning inventory was acquired when the exchange rate was $0.80 = LCU 1. Ending inventory was acquired when the exchange rate was $1.10 = LCU 1. The exchange rate at December 31, 2017, was $1.15 = LCU 1. Assuming that the foreign country is highly inflationary, at what amount should the foreign subsidiary’s cost of goods sold be reflected in the U.S. dollar income statement?a. $4,440,000.b. $4,840,000.c. $5,000,000.d. $5,750,000.
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On November 30, P Corporation purchased inventory from a Chinese supplier. The Chinese company requires payment to be made in Yuan. What exchange rate should be used to value the account payable on the balance sheet? a_ Weighted average exchange rate for the year. B) Exchange rate at the end of the year C) Exchange rate on the settlement date D) Exchange rate on the date of purchase.
On 11/1/2020, an American firm purchased an inventory costing 100,000 Canadian Dollars from a Canadian firm to be paid for on 2/1/2020. Also on 11/1/2020, the American firm entered into a forward contract to purchase 100,000 Canadian dollars for delivery on 2/1/2020. The exchange rates were as follows: Spot Forward 11/1/2020 1 CD = $0.73 1 CD = $0.74 12/31/2020 1 CD = $0.75 1 CD = $0.76 2/1/2021 1 CD = $0.79 1 CD = $0.79 The American firm's fiscal year-end is 12/31. The changes in the value of the forward contract should be discounted at 12%. 1. What is the beginning balance (as of 1/1/2021) of accounts payable to the Canadian firm? a. 79,000 b. 75,000 c. 0 d. 73,000 2. What is the balance on the settlement date (2/1/2021) of inventory purchased from the Canadian firm? a. 73,000 b. 75,000 c. 0 d. 79,000 3. How much…
XYZ Corp, has carried out transactions denominated in foreign currency during the financial year ended 31 October 2019 and has conducted foreign operations through a foreign entity. Its functional and presentation currency is the US dollar. XYZ purchased inventory from a foreign supplier for Euros 8 million on 31 July 2019, the trade payable was still outstanding and the inventory were still held by XYZ Corp. XYZ Corp sold its products to a foreign customer for Euros 4 million on 31 July 2019 and received payment for the products in euros on 31 October 2019. Additionally, XYZ Corp purchase investment property on 1 November 2018 for Euros 28 million. At 31 October 2019, the investment property had a fair value of Euros 24 million. The company uses the fair value model in accounting for its investment properties. XYZ would like advice on how to treat this transactions in the financial statement for the year ended 31 October 2019. Exchange rates Date Euro:$ Average Rate for Year to…
On December 31, 2008 a foreign subsidiary in US submitted the following balances stated in foreign currency:In US$ Total Assets 140,000 Total Liabilities 28,000 Ordinary Share 70,000 Retained Earnings 42,000 Relevant exchange rates are: current rate – P8.75; historical rate – P8.10; weighted average rate – P8.50. Assuming that the retained earnings of the subsidiary in December 31, 2008 translated to the peso is P290,000. What amount of cumulative translation adjustment is to be reported in the consolidated balance sheet on December 31, 2008?
If the hryvnia is chosen as the Ukraine subsidiary’s functional currency, Eurexim willtranslate its inventory using the:A . average rate for the reporting period.B . rate in eff ect at the end of the reporting period.C . rate in eff ect at the time the inventory was purchased.

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