Patents Are on the Books of a British Subsidiary of a U.S

question 25

Multiple Choice

Patents are on the books of a British subsidiary of a U.S. firm at a value of 50,000 pounds. The patents were acquired in 20X3 when the exchange rate was 1 pound = $1.50. The British subsidiary was acquired by the U.S. firm in 20X0 when the exchange rate was 1 pound = $1.40. The exchange rate on December 31, 20X4, the date of the most current balance sheet, is 1 pound = $1.55. The average rate of exchange for 20X4 is $1.53. Assuming the pound is the functional currency of the subsidiary, what exchange rate will be used to translate patents for the consolidated statements dated December 31, 20X4?

• A)$1.40
• B)$1.50
• C)$1.53
• D)$1.55

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Definitions:

Emerging Businesses

Companies in the early stages of operation, often characterized by rapid growth and development in its sector.

Angel

A lender, usually a successful entrepreneur, who loans money to help new businesses.

Assets

Resources owned or controlled by a business, considered valuable because they can be used to produce goods, provide services, or generate revenue.

Venture Capitalists

Investors who provide capital to startup companies and small businesses with perceived long-term growth potential in exchange for equity.