The British Subsidiary of a U

question 38

Multiple Choice

The British subsidiary of a U.S.company reported cost of goods sold of 75,000 pounds (sterling) for the current year ended December 31.The beginning inventory was 10,000 pounds,and the ending inventory was 15,000 pounds.Spot rates for various dates are as follows:
Assuming the dollar is the functional currency of the British subsidiary,the remeasured amount of cost of goods sold that should appear in the consolidated income statement is:

• A)$108,750.
• B)$112,500.
• C)$114,250.
• D)$125,700.

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Definitions:

Relevant Resources

Resources that are directly applicable and valuable in achieving a specific goal or solving a particular problem.

Decreasing-cost Industry

An industry in which costs per unit decrease as the scale of production increases.

Long-run Supply Curve

A curve that shows the relationship between the price of a good and the quantity supplied over a long period, taking into account all possible adjustments including entry and exit of firms.

Input Prices

The costs of raw materials and components required to produce a good or service.