Answered: Sales Inventory (bought on 3/1/17) .…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter7: Operating Assets

Section: Chapter Questions

Problem 4MCQ

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Question

Lancer, Inc. (a U.S.-based company), establishes a subsidiary in a foreign country on January 1, 2016. The following account balances for the year ending December 31, 2017, are stated in kanquo (KQ), the local currency:
The following U.S.$ per KQ exchange rates are applicable:
Lancer is preparing account balances to produce consolidated financial statements.
a. Assuming that the kanquo is the functional currency, what exchange rate would be used to report each of these accounts in U.S. dollar consolidated financial statements?
b. Assuming that the U.S. dollar is the functional currency, what exchange rate would be used to report each of these accounts in U.S. dollar consolidated financial statements?

Sales
Inventory (bought on 3/1/17) .
Equipment (bought on 1/1/16).
Rent expense...
Dividends (declared on 10/1/17)..
Notes receivable (to be collected in 2020) .
Accumulated depreciation-equipment.
Salary payable.....
Depreciation expense
KQ 200,000
80,000
20,000
30,000
24,000
5,000
8,000

January 1, 2016..
Average for 2016
January 1, 2017...
March 1, 2017
October 1, 2017 .....
December 31, 2017...
Average for 2017
$0.13
0.14
0.18
0.19
0.21
0.22
0.20

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