Lancer, Inc. (a U.S.-based company), establishes a subsidiary in Croatia on January 1, 2019. The following account balances for the year ending December 31, 2020, are stated in kuna (K), the local currency: Sales Inventory (bought on 3/1/20) Equipment (bought on 1/1/19) Rent expense K 310,000 170,500 82,000 20,000 28,000 47,000 24,600 7,200 8,200 Dividends (declared on 10/1/20) Notes receivable (to be collected in 2023) Accumulated depreciation-equipment Salary payable Depreciation expense The following U.S.$ per kuna exchange rates are applicable: January 1, 2019 $0.30 Average for 2019 0.31 January 1, 2020 0.35 March 1, 2020 0.36 October 1, 2020 0.38 December 31, 2020 0.39 Average for 2020 0.37 Lancer is preparing account balances to produce consolidated financial statements. a. Assuming that the kuna 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? For all requirements, round your answers to 2 decimal places.)

Lancer, Inc. (a U.S.-based company), establishes a subsidiary in Croatia on January 1, 2019. The following account balances for the year ending December 31, 2020, are stated in kuna (K), the local currency: Sales Inventory (bought on 3/1/20) Equipment (bought on 1/1/19) Rent expense K 310,000 170,500 82,000 20,000 28,000 47,000 24,600 7,200 8,200 Dividends (declared on 10/1/20) Notes receivable (to be collected in 2023) Accumulated depreciation-equipment Salary payable Depreciation expense The following U.S.$ per kuna exchange rates are applicable: January 1, 2019 $0.30 Average for 2019 0.31 January 1, 2020 0.35 March 1, 2020 0.36 October 1, 2020 0.38 December 31, 2020 0.39 Average for 2020 0.37 Lancer is preparing account balances to produce consolidated financial statements. a. Assuming that the kuna 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? For all requirements, round your answers to 2 decimal places.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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