A USFirm Has Total Assets Valued at £890,000 Located in London

question 30

Multiple Choice

A U.S.firm has total assets valued at £890,000 located in London.This valuation did not change from last year.Last year,the exchange rate was £0.62 = $1.Today,the exchange rate is £0.68 = $1.By what amount did these assets change in value on the firm's U.S.financial statements?

• A)-$126,660.34
• B)$-113,511.03
• C)$-87,248.91
• D)$113,511.03
• E)$126,660.34

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Definitions:

Lease Liability

A financial obligation representing the present value of future lease payments that a lessee is required to make under a lease agreement.

Discount Rate

The interest rate used in discounted cash flow (DCF) analysis to present value future cash flows, or in the context of bond investments, it is the interest rate used by investors to compare different bond issues.

Capital Lease

A lease considered as a purchase of an asset, where the lessee records the leased asset as if it were owned.

Lease Payments

Regular payments made by a lessee to a lessor for the use of an asset, typically defined in a lease agreement.