Assume that the U.S. dollar is the subsidiary’s functional currency. What balances does a consolidated balance sheet report as of December 31, 2017?
A Clarke Corporation subsidiary buys marketable equity securities and inventory on April 1, 2017, for 100,000 won each. It pays for both items on June 1, 2017, and they are still on hand at year-end. Inventory is carried at cost under the lower-of-cost-or-net realizable rule. Currency exchange rates for 1 won follow:
| January 1, 2017 | $ .33 = 1 won |
| April 1, 2017 | .34 = 1 |
| June 1, 2017 | .35 = 1 |
| December 31, 2017 | .37 = 1 |
1. Assume that the won is the subsidiary’s functional currency. What balances does a consolidated
Marketable equity securities = $37,000 and Inventory = $37,000.
Marketable equity securities = $34,000 and Inventory = $34,000.
Marketable equity securities = $35,000 and Inventory = $35,000.
Marketable equity securities = $37,000 and Inventory = $34,000.
2. Assume that the U.S. dollar is the subsidiary’s functional currency. What balances does a consolidated balance sheet report as of December 31, 2017?
Marketable equity securities = $35,000 and Inventory = $35,000.
Marketable equity securities = $37,000 and Inventory = $37,000.
Marketable equity securities = $34,000 and Inventory = $34,000.
Marketable equity securities = $37,000 and Inventory = $34,000.
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
