Quadros Inc $\text { Relevant exchange rates for } 1 \text { Euro are given below: }$

question 26

Multiple Choice

Quadros Inc., a Portuguese firm was acquired by a U.S. company on January 1, 2012. Selected account balances are available for the year ended December 31, 2013, and are stated in Euro, the local currency. $\begin{array}{lr}\text { Sales } & € 400,000 \\\text { Inventory (bought on February 1, 2013) } & 20,000 \\\text { Equipment (bought on January 1, 2012) } & 90,000 \\\text { Dividends (paid on September 1, 2013) } & 20,000 \\\text { Accumulated depreciation - Equipment 12/31/13 } & 45,000 \\\text { Depreciation expense - Equipment, 2013 } & 9,000\end{array}$

$\text { Relevant exchange rates for } 1 \text { Euro are given below: }$
$\begin{array}{lr}\text { January 1, 2012 } & \$ .91 \\\text { January 1, 2013 } & .93 \\\text { February 1, 2013 } & .94 \\\text { September 1, 2013 } & .97 \\\text { December 31, 2013 } & 1.01 \\\text { 4 th quarter average, 2012 } & .90 \\\text { 4 th quarter average, 2013 } & .98 \\\text { Average, 2013 } & .95\end{array}$ Assume the functional currency is the Euro; compute the U.S. balance sheet amount for accumulated depreciation for 2013.

• A)$40,950.
• B)$41,850.
• C)$45,450.
• D)$42,750.
• E)$44,100.

---

Definitions:

Acid-test Ratio

A liquidity measurement that evaluates whether a company can pay its short-term obligations using its most liquid assets, typically excluding inventory.

Accrual-Based

An accounting method where revenue and expenses are recorded when they are earned or incurred, regardless of when cash transactions occur.

Transactional Approach

An accounting method focusing on the individual transactions and events that have a financial impact on a company, analyzing each separately.

Net Income

The total earnings or profit of a company after subtracting all expenses, taxes, and costs, indicative of the company's financial health over a specific time period.