A French subsidiary of a U.S. firm keeps accounting records in euros. The U.S. dollar is considered the subsidiary's functional currency. Assume the following exchange rates:
Date 1 euro equal to
January 1, 2018 $1.05
July 1, 2018 $1.07
Dec. 31, 2018 $1.09
Average 2018 $1.08
January 1, 2019 $1.09
July 1, 2019 $1.07
Dec. 31, 2019 $1.06
Average 2019 $1.08
Required:
Re-measure the following items from the December 31, 2019 trial balance of the subsidiary:
a. Sales made evenly throughout 2019 = 100,000 euros
b. Cost of goods sold = 30,000 euros 5,000 euros purchased July 1, 201825,000 euros purchased July 1, 2019
c. Salary expense for 2019 = 40,000 euros
d. Land = 1,000,000 euros
200,000 euros purchased January 1, 2018
800,000 euros purchased July 1, 2019
a. Sales: (100,000 ´ 1.08) $108,000
b. Cost of goods sold:
(5,000 ´ 1.07) $ 5,350
(25,000 ´ 1.07) 26,750
$32,100
c. Salary expense: (40,000 ´ 1.08) $43,200
d. Land:
(200,000 ´ 1.05) $ 210,000
(800,000 ´ 1.07) 856,000
$1,066,000
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