Chapter 7, Problem 11EP

The Year 1 financial statements of the Chinese subsidiary of Singcom Limited (a Singapore-based company) revealed the following:

Singapore dollar (SGD) exchange rates for 1 CNY are as follows:

The beginning inventory was acquired in the last quarter of the previous year, when the exchange rate was SGD 0.210 = CNY 1; ending inventory was acquired in the last quarter of the current year, when the exchange rate was SGD 0.205 = CNY 1.

Required:

1. a. Assuming that the current rate method is the appropriate method of translation, determine the amounts at which the Chinese subsidiary’s ending inventory and cost of goods sold should be included in Singcom’s Year 1 consolidated financial statements.
2. b. Assuming that the temporal method is the appropriate method of translation, determine the amounts at which the Chinese subsidiary’s ending inventory and cost of goods sold should be included in Singcom’s Year 1 consolidated financial statements.