Certain balance sheet accounts of a foreign subsidiary of Rose Company have been

Question

Certain balance sheet accounts of a foreign subsidiary of Rose Company have been stated in U.S. dollars as follows:

1.

Required information

This subsidiary’s functional currency is a foreign currency. What total should Rose’s balance sheet include for the preceding items?

$550,000.

$543,000.

$561,000.

$548,000.

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2.

Required information

This subsidiary’s functional currency is the U.S. dollar. What total should Rose’s balance sheet include for the preceding items?

$543,000.

$548,000.

$550,000.

$561,000.

Stated at Current Rates Historical Rates   Accounts receivable, current $ 271,000 $ 291,000   Accounts receivable, long term 122,000 133,000   Prepaid insurance 61,000 63,000   Goodwill 89,000 94,000 $ 543,000 $ 581,000

Explanation / Answer

Answer 1 : $ 543,000 is correct (271,000+122,000+61,000+89,000)

Answer 2: $ 561,000 is correct (271,000+133,000+63,000+94,000)

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