A US Company's Foreign Subsidiary Had the Following Amounts in Stickles

question 61

Multiple Choice

A U.S. company's foreign subsidiary had the following amounts in stickles (§) , the functional currency, in 2021: The average exchange rate during 2021 was §1 = $0.96. The beginning inventory was acquired when the exchange rate was §1 = $1.20. The ending inventory was acquired when the exchange rate was §1 = $0.90. The exchange rate at December 31, 2021 was §1 = $0.84. Assuming that the foreign nation for the subsidiary had a highly inflationary economy, at what amount should that foreign subsidiary's purchases have been reflected in the 2021 U.S. dollar income statement?

• A) $11,865,600.
• B) $11,577,600.
• C) $11,520,000.
• D) $11,613,600.
• E) $11,523,600.

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Definitions:

Inductive Reasoning

A method of reasoning in which specific observations or sets of observations are used to make general conclusions.

Normative Statement

An opinion or judgment that expresses what ought to be, encompassing values or ideals, rather than factual assertions.

Positive Statement

An objective statement that can be tested or validated and is based on factual information.

Efficient Market

A financial market theory suggesting that asset prices fully reflect all available information, making it impossible to consistently achieve higher returns than the average market return.