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:

Implied in Fact Contract

An agreement formed by actions and conduct of the parties involved, rather than written or spoken words.

Void Contract

An agreement that is not legally binding and is unenforceable by law, typically because it lacks one or more essential elements of a valid contract.

Incompetent

Lacking the necessary skills, abilities, or legal qualifications to perform a task or to stand trial.

Binding Agreement

A legally enforceable contract that obligates the parties involved to adhere to the terms outlined within the agreement.