ABCs ending inventory is valued at the average cost for the last quarter of the year. The
Question:
ABC’s ending inventory is valued at the average cost for the last quarter of the year.
The following account balances are available for ABC Corp. for 2021:
Beginning inventory | € | 20,000 |
Purchases | € | 400,000 |
Ending inventory | € | 15,000 |
4th quarter average, 2020 | $ | 0.93 | = | € | 1 |
December 31, 2020 | 0.94 | = | € | 1 | |
Average for 2021 | 0.96 | = | € | 1 | |
4th quarter average, 2021 | 0.99 | = | € | 1 | |
December 31, 2021 | 1.01 | = | € | 1 | |
a. Compute the cost of goods sold for 2021 in U.S. dollars using the current rate method.
ABC Company, a Canadian subsidiary of a U.S. company, sold equipment costing 200,000 Canadian dollars with accumulated depreciation of 75,000 Canadian dollars for 140,000
Canadian dollars on March 1, 2021. The equipment was purchased on January 1, 2020. Relevant exchange rates for the Canadian dollars are as follows:
January 1, 2020 | $ | 0.110 | |||
March 1, 2021 | 0.105 | ||||
December 31, 2021 | 0.102 | ||||
Average, 2021 | 0.106 | ||||
a. The financial statements for ABC Corp. are translated by its U.S. parent.
b. What amount of gain or loss would be reported in its translated income statement under the current rate method?
Expert Answer:
a Compute the cost of goods sold for 2021 in US dollars using the current rate method The cost of g... View the full answer
