A wholly owned subsidiary of a U.S. parent company has certain expense accounts for the year ended December 31, 2011, stated in local currency units (LCU) as follows: LCU Depreciation of equipment (related assets were purchased January 1, 2009) 375,000 Provision for doubtful accounts 250,000 Rent 625,000 The exchange rates at various dates are as follows: Dollar equivalent of I LCU $0.50 December 31, 2011 0,55 Average for year ended December 31, 2011 0,40 January 1. 2009 - ill e 10:59 7-TI/-W EN
A wholly owned subsidiary of a U.S. parent company has certain expense accounts for the year ended December 31, 2011, stated in local currency units (LCU) as follows: LCU Depreciation of equipment (related assets were purchased January 1, 2009) 375,000 Provision for doubtful accounts 250,000 Rent 625,000 The exchange rates at various dates are as follows: Dollar equivalent of I LCU $0.50 December 31, 2011 0,55 Average for year ended December 31, 2011 0,40 January 1. 2009 - ill e 10:59 7-TI/-W EN
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![A wholly owned subsidiary of a U.S. parent company haS certain expense accounts for the year ended
December 31, 2011, stated in local currency units (LCU) as follows:
LCU
Depreciation of equipment (related assets
were purchased January 1, 2009)
375,000
Provision for doubtful accounts
250,000
Rent
625,000
The exchange rates at various dates are as follows:
Dollar equivalent
of 1 LCU
December 31, 2011
$0.50
0,55
Average for year ended December 31, 2011
0.40
January 1, 2009
10:59
T-TI/-W
EN
lenovo
DODOLBYO](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F6061487b-a795-4845-9f35-7404db35722c%2F59f4cfc8-f67c-493a-b249-bd61ac09f317%2Fd1ncrre_processed.jpeg&w=3840&q=75)
Transcribed Image Text:A wholly owned subsidiary of a U.S. parent company haS certain expense accounts for the year ended
December 31, 2011, stated in local currency units (LCU) as follows:
LCU
Depreciation of equipment (related assets
were purchased January 1, 2009)
375,000
Provision for doubtful accounts
250,000
Rent
625,000
The exchange rates at various dates are as follows:
Dollar equivalent
of 1 LCU
December 31, 2011
$0.50
0,55
Average for year ended December 31, 2011
0.40
January 1, 2009
10:59
T-TI/-W
EN
lenovo
DODOLBYO
![Average for year ended December 31, 2011
0.55
January 1, 2009
0.40
Assume that the LCU is the subsidiary's functional currency and that the charges to the expense accounts
occurred approximately evenly during the year. What total dollar amount should be included in the
translated income statement to reflect these expenses?
a. $550,000
b.
$687,500
Uc.
$500,000
Od.
$625,000
The translation adjustment that results from transtating the financial statements of a foreign subsidiary
using the current rate method should be:
11:01
EN
all
lenovo](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F6061487b-a795-4845-9f35-7404db35722c%2F59f4cfc8-f67c-493a-b249-bd61ac09f317%2Fc9pu0mcq_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Average for year ended December 31, 2011
0.55
January 1, 2009
0.40
Assume that the LCU is the subsidiary's functional currency and that the charges to the expense accounts
occurred approximately evenly during the year. What total dollar amount should be included in the
translated income statement to reflect these expenses?
a. $550,000
b.
$687,500
Uc.
$500,000
Od.
$625,000
The translation adjustment that results from transtating the financial statements of a foreign subsidiary
using the current rate method should be:
11:01
EN
all
lenovo
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