Question: Certain balance sheet accounts of a foreign subsidiary of Rose Company have been stated in U.S.
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Question:
Question:
Certain balance sheet accounts of a foreign subsidiary of Rose Company have been stated in U.S. dollars as follows:
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 |
Required:
1. This subsidiary's functional currency is a foreign currency. What total should Rose's balance sheet include for the preceding items?
a. $550,000.
b. $543,000.
c. $561,000.
d. $548,000.
2. This subsidiary's functional currency is the U.S. dollar. What total should Rose's balance sheet include for the preceding items?
a. $543,000.
b. $548,000.
c. $550,000.
d. $561,000.
Please do show your computation.
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