The following balance sheet accounts of a foreign subsidiary at December 31, 201

ID: 2543935 • Letter: T

Question

The following balance sheet accounts of a foreign subsidiary at December 31, 2017, have been translated into U.S. dollars as follows: What total should be included in the translated balance sheet at December 31, 2017, for the above items? Assume the U.S. dollar is the functional currency. Translated at Historical Rates s 660,000 324,000 Current Rates 600,000 00,000 Accounts receivable, current Accounts receivable, long- term Inventories carried at market 180,000 198,000 Goodwill 190,000 220,000 Minimized View $1,270,000 $1,288,000 51,300,000 0e e here to search

Explanation / Answer

Answer:

When the balance sheet of a foreign subsidiary is translated, the net assets are measured at current rate ad inventory is measured at historical rate. Hence, the total of translated balance sheet at Dec. 31, 2017 is:

Account Receivables, current (at current rate)

$ 6,00,000

Account Receivables, long term (at current rate)

$ 3,00,000

Inventories carried at market (at historical rate)

$ 1,98,000

Goodwill (at current rate)

$ 1,90,000

Total

$ 12,88,000