Question

The average exchange rate during 2020 was $.96 = §1. The beginning inventory was acquired when the exchange rate was $1.20 = §1. The ending inventory was acquired when the exchange rate was $.90 = §1 and current market value of the inventory is higher than the acquisition cost. The exchange rate at December 31, 2020 was $.84 = §1. Assuming that the foreign country had a highly inflationary economy, at what amount should the foreign subsidiary's cost of goods sold have been reflected in the U.S. dollar income statement?

Answer 1

$11,613,600

Step-by-step explanation:

Beginning Inventory 240 * rate at that date 1.20 = 288,000

Purchase 12,360, 000 * 0.96 average for the year = 11,865,600

Available for sale =(11,865,600+288,000)

12,153,600

Ending 600,000 * BalanceSheet HR .90 = 540,000

COGS =( 12,153,600-540,000) $11,613,600

Therefore Assuming that the foreign country had a highly inflationary economy, at what amount should the foreign subsidiary's cost of goods sold have been reflected in the U.S. dollar income statement will be $11,613,600