Lucia Corporation owns a foreign subsidiary with 2,500,000 local currency units (LCU) of property, plant, and equipment before accumulated depreciation on December 31,20X4. Of this amount, 2,100,000 LCU were acquired

in 20X2 when the rate of exchange was 1.5 LCU = $1, and 400,000 LCU were acquired in 20X3 when the rate of

exchange was 1.6 LCU = $1. The rate of exchange in effect on December 31,20X4, was 1.8 LCU = $1. The weighted

average of exchange rates that were in effect during 20X4 was 1.7 LCU = $1. Assume that the U.S. dollar is the

functional currency. The property, plant, and equipment are depreciated using the straight-line method over a 10-year period with no salvage value. How much depreciation expense relating to the foreign subsidiary's property, plant, and equipment should be charged in Lucia's income statement for 20X4?

Answer rating: 100% (QA)

Answer To calculate the depreciation expense relating to the foreign subsidiarys property plant and ... View the full answer