Assume that our subsidiary’s income statement in Euros (€) is reported as follows for the year: Income statement: In Euros (€) Sales 2,500,000 Cost of goods sold (1,600,000) Gross Profit 900,000 Operating expenses (540,000) Net income 360,000 Also assume the following exchange rates: $ / € BOY Rate $1.30 EOY rate $1.40 Avg. rate $1.35
Assume that our subsidiary’s income statement in Euros (€) is reported as follows for the year: Income statement: In Euros (€) Sales 2,500,000 Cost of goods sold (1,600,000) Gross Profit 900,000 Operating expenses (540,000) Net income 360,000 Also assume the following exchange rates: $ / € BOY Rate $1.30 EOY rate $1.40 Avg. rate $1.35
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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1-Assume that our subsidiary’s income statement in Euros (€) is reported as follows for the year:
|
Income statement: |
In Euros (€) |
|
Sales |
2,500,000 |
|
Cost of goods sold |
(1,600,000) |
|
Gross Profit |
900,000 |
|
Operating expenses |
(540,000) |
|
Net income |
360,000 |
Also assume the following exchange rates:
|
|
$ / € |
|
BOY Rate |
$1.30 |
|
EOY rate |
$1.40 |
|
Avg. rate |
$1.35 |
Required: Translate the income statement into $US using the current-rate method.
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