Final answer:
XYZ Company should report $800 million in foreign sales on its 2023 U.S. GAAP financial statements, reflecting the revenue earned in U.S. dollars from international operations.
Step-by-step explanation:
The amount of foreign sales that XYZ Company should report on its 2023 U.S. GAAP financial statements is $800 million. This is because, according to U.S. GAAP, revenues should be recognized in the currency in which the sales were denominated, which in this case is U.S. dollars.
Firms with international operations, like XYZ Company, typically have production costs in the currency of the country where the production occurs, but earn revenue in the currency of the country where the goods or services are sold. As an American company, XYZ earns revenue in U.S. dollars from its foreign sales regardless of the currency used in the countries where sales were made. Therefore, the exchange rate does not play a role in the reporting of these sales on the financial statements prepared under U.S. GAAP.
In order to determine the amount of foreign sales that XYZ should report on its 2023 U.S. GAAP financial statements, we need to consider the currency exchange rate between the U.S. dollar and the foreign currency. The correct formula to use is:
$800 million * (foreign currency exchange rate / U.S. dollar exchange rate)
This formula will give us the equivalent amount in the foreign currency that XYZ earned from its foreign sales. By multiplying the sales amount in U.S. dollars by the ratio of the foreign currency exchange rate to the U.S. dollar exchange rate, we can convert the sales amount into the foreign currency.