A U.S. company’s foreign subsidiary had these amounts in local currency units (LCU) in 2017: Cost of goods sold . . . . LCU 5,000,000Beginning inventory . . . . . 500,000Ending inventory . . . . . . . . 600,000 The average exchange rate during 2017 was $1.00 = LCU 1. The beginning inventory was acquired when the exchange rate was $0.80 = LCU 1. Ending inventory was acquired when the exchange rate was $1.10 = LCU 1. The exchange rate at December 31, 2017, was $1.15 = LCU 1. Assuming that the foreign country is highly inflationary, at what amount should the foreign subsidiary’s cost of goods sold be reflected in the U.S. dollar income statement? Choose the correct.a. $4,440,000.b. $4,840,000.c. $5,000,000.d. $5,750,000.
A U.S. company’s foreign subsidiary had these amounts in local currency units (LCU) in 2017:
Cost of goods sold . . . . LCU 5,000,000
Beginning inventory . . . . . 500,000
Ending inventory . . . . . . . . 600,000
The average exchange rate during 2017 was $1.00 = LCU 1. The beginning inventory was acquired
when the exchange rate was $0.80 = LCU 1. Ending inventory was acquired when the exchange rate was $1.10 = LCU 1. The exchange rate at December 31, 2017, was $1.15 = LCU 1. Assuming that the foreign country is highly inflationary, at what amount should the foreign subsidiary’s cost
of goods sold be reflected in the U.S. dollar income statement? Choose the correct.
a. $4,440,000.
b. $4,840,000.
c. $5,000,000.
d. $5,750,000.
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