XYZ Corporation, a U.S. parent firm, has a wholly owned sales affiliate, ABC Ltd., in the United
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Question:
XYZ Corporation, a U.S. parent firm, has a wholly owned sales affiliate, ABC Ltd., in the United Kingdom. The affiliate was established to service the local market.
Assume that
- the functional currency of ABC is the pound.
- the reporting currency is the dollar.
- the initial exchange rate $1.00 = £0.67.
ABC's nonconsolidated balance sheets and the footnotes to the financial statements indicate that ABC owes the parent firm £200,000. Assume that, XYZ had made an investment of $500,000 in the affiliate. Under FASB 52, the intercompany debt and investment will appear on the consolidated balance sheet as
Multiple Choice
£200,000.
$201,493.
$298,507.
none of the options
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