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

question 59

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 2016 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, 2017, the date of the most current balance sheet, is 1 pound = $1.55.The average rate of exchange for 2017 is $1.53.Assuming the dollar is the functional currency of the subsidiary, what exchange rate will be used to re-measure patents for the consolidated statements dated December 31, 2017?

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

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Definitions:

Adverse Possession

The acquisition of title to real property through open occupation, without the consent of the owner, for a period of time specified by a state statute. The occupation must be actual, exclusive, open, continuous, and in opposition to all others, including the owner.

Individual's Right

Legal entitlements or freedoms guaranteed to a person under a legal system.

Absolute

Unconditional and complete, often referring to rights or decisions that are not subject to limitations or exceptions.

License

A permit from an authority to own or use something, do a particular thing, or carry out a trade.