A Subsidiary of Reynolds Inc

question 31

Multiple Choice

A subsidiary of Reynolds Inc., a U.S. company, was located in a foreign country. The local currency of this subsidiary was the Euro (€) while the functional currency of this subsidiary was the U.S. dollar. The subsidiary acquired Equipment A on January 1, 2018, for €250,000. Depreciation expense associated with Equipment A was €25,000 per year. On January 1, 2020, the subsidiary acquired Equipment B for €150,000 and Equipment B had associated depreciation expense of €10,000. The subsidiary owned no other depreciable assets. Currency exchange rates between the U.S. dollar and the Euro were as follows: What amount would have been reported for depreciation expense related to the equipment owned by the subsidiary in Reynolds's consolidated balance sheet at December 31, 2020?

• A) $42,600.
• B) $44,800.
• C) $45,500.
• D) $42,300.
• E) $41,500.

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Definitions:

Identical Glasses

Glasses that are exactly the same in appearance and specifications.

Concrete Operations

This stage in Piaget's theory of cognitive development describes children aged 7-12 years becoming capable of logical thought processes but still struggling with abstract concepts.

Cognitive Development

The process by which individuals perceive, think, and gain understanding through the interaction of genetic and learned factors.

Abstract Thinking

involves the ability to think about objects, principles, and ideas that are not physically present, allowing for processes like conceptualizing, reasoning, and problem-solving.