A U.S. company's foreign subsidiary had these amounts in local currency units (LCU) in 2024: Cost of goods sold Beginning inventory Ending inventory LCU 5,590,000 501,000 604,000 The average exchange rate during 2024 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 on December 31, 2024, was $1.65 =LCU 1. Required: Assuming that the foreign country is highly inflationary, determine the amount at which the foreign subsidiary's cost of goods sold should be reflected in the U.S. dollar income statement. Cost of goods sold
A U.S. company's foreign subsidiary had these amounts in local currency units (LCU) in 2024: Cost of goods sold Beginning inventory Ending inventory LCU 5,590,000 501,000 604,000 The average exchange rate during 2024 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 on December 31, 2024, was $1.65 =LCU 1. Required: Assuming that the foreign country is highly inflationary, determine the amount at which the foreign subsidiary's cost of goods sold should be reflected in the U.S. dollar income statement. Cost of goods sold
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:A U.S. company's foreign subsidiary had these amounts in local currency units (LCU) in 2024:
Cost of goods sold
Beginning inventory
Ending inventory
LCU 5,590,000
501,000
604,000
The average exchange rate during 2024 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 on December 31, 2024, was
$1.65 =LCU 1.
Required:
Assuming that the foreign country is highly inflationary, determine the amount at which the foreign subsidiary's cost of goods sold
should be reflected in the U.S. dollar income statement.
Cost of goods sold
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