Assume that U.S. parent company ABC has a subsidiary XYZ in Outer Mongolia. XYZ\
ID: 2432845 • Letter: A
Question
Assume that U.S. parent company ABC has a subsidiary XYZ in Outer Mongolia. XYZ's total assets are as follows in Mongolian marks (assuming Mongolian currency is the functional currency):
Cash and receivables 500,000
Inventory 500,000
Fixed assets (net) 900,000
The relevant exchange rates are:
OMM 1.6800 closing rate on the balance sheet date
OMM 1.5500 exchange rate when the fixed assets were acquired
OMM 1.6300 average exchange rate for the period
OMM 1.6600 average exchange rate when ending inventory was acquired.
What is the total value of assets if the functional currency is the Outer Mongolian mark?
$1,175,883
$1,130,952
$1,185,012
$1,179,469
Assume that U.S. parent company ABC has a subsidiary XYZ in Outer Mongolia. XYZ's total assets are as follows in Mongolian marks (assuming Mongolian currency is the functional currency):
Cash and receivables 500,000
Inventory 500,000
Fixed assets (net) 900,000
The relevant exchange rates are:
OMM 1.6800 closing rate on the balance sheet date
OMM 1.5500 exchange rate when the fixed assets were acquired
OMM 1.6300 average exchange rate for the period
OMM 1.6600 average exchange rate when ending inventory was acquired.
What is the total value of assets if the functional currency is the Outer Mongolian mark?
Answers: a.$1,175,883
b.$1,130,952
c.$1,185,012
d.$1,179,469
Explanation / Answer
answer: (b)
Asset
Value
Exchange rate
Value in dollar
Cash and receivables
500,000
1.6800
297,619
inventory
500,000
1.6800
297,619
Fixed assets
900,000
1.6800
535,714
Total assets
1,130,952
THANK YOU.
Asset
Value
Exchange rate
Value in dollar
Cash and receivables
500,000
1.6800
297,619
inventory
500,000
1.6800
297,619
Fixed assets
900,000
1.6800
535,714
Total assets
1,130,952
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