A Foreign Subsidiary Uses the First-In First-Out Inventory Method $\text { The following exchange rates are given for } 2011$

question 72

Multiple Choice

A foreign subsidiary uses the first-in first-out inventory method. The following inventory balances are given at December 31, 2011 in local currency units (LCU) : $\begin{array}{ll}\text { Inventory at cost } & 320,000 \mathrm{LCU} \\\text { Inventory at replacement cost } & 300,000 \\\text { Inventory at net realizable value } & 420,000 \\\text { Inventory at net realizable value } &\\\text { less normal profit margin }&400,000\end{array}$
$\text { The following exchange rates are given for } 2011$
$\begin{array} { l } \text { \( 4^{\text {th }} \) quarter average, 2011} &\$ 1.43=1 \mathrm{LCU}\\ \text { December 31.2011}&1.42=1 \mathrm{LCU}\\\end{array}$

-Compute the December 31, 2011, inventory balance using the current rate method.

• A) $454,400.
• B) $457,600.
• C) $596,400.
• D) $568,000.
• E) $426,000.

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Definitions:

Morally Accountable

Being responsible or answerable for one's actions from an ethical or moral standpoint.

Corporations

Legal entities recognized by law as separate from their owners, with the ability to own property, enter contracts, and be sued.

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The process or act of amassing a significant amount of wealth or resources over time.