Assume That U $\begin{array}{ll}\text { Cash and receivables } & 500,000 \\ \text { Inventory } & 500,000 \\ \text { Fixed assets (net) } & 900,000\end{array}$

question 30

Multiple Choice

Assume that U.S. parent company ABC has a subsidiary XYZ in Outer Mongolia. XYZ's total assets are as follows in Mongolian marks: $\begin{array}{ll}\text { Cash and receivables } & 500,000 \\ \text { Inventory } & 500,000 \\ \text { Fixed assets (net) } & 900,000\end{array}$
The relevant exchange rates are:
OMM 1.6800 closing rate on the balance sheet date
OMM 1.5500 exchange rate when the fixed assets were acquired
OMM 1.6300 average exchange rate for the period
OMM 1.6600 average exchange rate when ending inventory was acquired.
What is the total value of assets if the functional currency is the Outer Mongolian mark?

• A) $1,130,952
• B) $1,179,469
• C) $1,175,883
• D) $1,185,012

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Definitions:

Book Net Income

The net profit or loss of a company as reported in its financial statements, calculated according to accounting principles rather than tax regulations.

Meal Expenses

Costs for food and beverages that may be deductible under certain conditions when incurred in the course of conducting business.

Capital Losses

Financial losses incurred when a capital asset is sold for less than its purchase price.

Tax-exempt Bonds

Bonds issued by governmental entities or certain non-profits that do not require the bondholder to pay taxes on the interest earned, making them an attractive investment option.