XYZ Corporation, a U

question 3

Multiple Choice

XYZ Corporation, a U.S. parent firm, has a wholly owned sales affiliate, ABC Ltd., in the United Kingdom. The affiliate was established to service to the local market. Assume that:
1) the functional currency of ABC is the pound
2) the reporting currency is the dollar
3) the initial exchange rate $1.00 = £0.67
ABC's nonconsolidated balance sheets and the footnotes to the financial statements indicate that ABC owes the parent firm £200,000. Assume that, XYZ had made an investment of $500,000 in the affiliate. Under FASB 52, the intercompany debt and investment will appear on the consolidated balance sheet as

• A)£200,000.
• B)$201,493.
• C)$298,507.
• D)none of the above

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Definitions:

Metaphorical Relationships

The connections or associations between two disparate entities where one serves as a symbol or representation of the other.

Spatial Relationships

This involves understanding how objects or shapes are positioned in space in relation to each other.

Independent Variable

In research, the variable that is manipulated or changed by the researcher to observe its effects on the dependent variable.

Spatial Reasoning

The cognitive ability to manipulate, organize, and visualize spatial relationships or objects in one's mind, important in solving math and science problems and in everyday tasks such as navigation.