Question

Mex Ltd. is an integrated foreign subsidiary. At the end of the current year, the inventory of the company was as follows:
Cost ......... 14,862,000 pesos
Net realizable value ... 12,100,000 pesos
Applying the lower of cost and net realizable value, the company wrote the inventory down by Ps 2,762,000 for presentation in its financial statements. When these financial statements were received by the parent company in Canada for translation, it was determined that the year-end spot rate was $1 = Ps382. The closing inventory at cost is composed of the following:
Required:
(a) At what amount would the inventory be shown on the translated balance sheet of Mex? And what amount of loss from write-down would appear on the translated income statement?
(b) If the year-end spot rate was $1 = Ps281, at what amount would the inventory be shown on the translated balance sheet? And what amount of loss from write-down would appear on the translated income statement?


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  • CreatedJune 09, 2015
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