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

question 82

Multiple Choice

A U.S. company's foreign subsidiary had the following amounts in stickles (§) in 2013: The average exchange rate during 2013 was §1 = $.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 = $.90. The exchange rate at December 31, 2013 was §1 = $.84. Assuming that the foreign country had a highly inflationary economy, at what amount should the foreign subsidiary's cost of goods sold have been reflected in the 2013 U.S. dollar income statement?

• A)$11,253,600.
• B)$11,577,600.
• C)$11,649,600.
• D)$11,613,600.
• E)$11,523,600.

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Definitions:

Repudiates

The action of refusing to accept, acknowledge, or be associated with; in contract law, it refers to the refusal to fulfill contractual obligations.

Sober

A state of being free from the influence of alcohol or drugs, characterized by clear thinking and the absence of intoxication.

Agency Agreement

A contract in which one party (the agent) agrees to act on behalf of another party (the principal) in business transactions.

Commission

A fee or percentage of a transaction paid to an agent or broker for facilitating a sale or service.