A U.K. parent has a wholly‑owned subsidiary in Mexico, whose functional currency is the Mexican peso. The subsidiary reports plant and equipment of 10,000,000 pesos at the end of 2020. The Mexican economy is determined to be hyperinflationary at the beginning of 2020. The peso is worth £0.01 at the end of 2020. The plant and equipment was acquired when the exchange rate was £0.05. The general price‑level index for Mexico rose from 100 to 400 during the time the subsidiary held the plant and equipment. The translated plant and equipment, following IFRS and U.S. GAAP, is

a. £500,000 under IFRS and £500,000 under U.S. GAAP.

b. £400,000 under IFRS and £500,000 under U.S. GAAP.

c. £500,000 under IFRS and £100,000 under U.S. GAAP.

d. £400,000 under IFRS and £100,000 under U.S. GAAP

Answer rating: 100% (QA)

NSb IFRS 10000000 x 400100 40000000 x 01 400000 US G 10000000 x 05 500000 Ntes US G Blne sheet munts ... View the full answer