A U.S. company acquired a Turkish subsidiary at the beginning of the current year. The subsidiary's trial balances for January 1 and December 31 are presented below, in Turkish lira.
January 1 Dr (Cr) |
December 31 Dr (Cr) |
|
Cash, receivables |
₺ 40,000 |
₺ 20,000 |
Plant & equipment, net |
400,000 |
435,000 |
Liabilities |
(175,000) |
(170,000) |
Capital stock |
(115,000) |
(115,000) |
Retained earnings, January 1 |
(150,000) |
(150,000) |
Dividends |
15,000 |
|
Sales revenue |
(800,000) |
|
Operating expenses |
________ |
765,000 |
Total |
₺ 0 |
₺ 0 |
New plant & equipment of ₺100,000 was acquired during the year.
Operating expenses include ₺65,000 of depreciation on plant &
equipment, of which ₺10,000 is related to plant & equipment
purchased during the year. Exchange rates (U.S.$/₺) are as
follows:
January 1 |
$0.24 |
Average for year |
0.25 |
Plant & equipment acquired |
0.26 |
Dividends declared |
0.27 |
December 31 |
0.30 |
Assume that the subsidiary's functional currency is the U.S.
dollar. What are remeasured total assets for the subsidiary at the
end of the year?
A. |
$112,200 |
|
B. |
$114,750 |
|
C. |
$126,450 |
|
D. |
$136,500 |
Remeasured total assets value means assets value is converted from one currency to another currency. The value will change it may increases or decreases. The assets are generally valued at the end of the exchange rate. The assets are taken are net, means after deducting the depreciation.
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