A U.S. parent acquired all of the stock of its British subsidiary at the beginning of 2010,

Question:

A U.S. parent acquired all of the stock of its British subsidiary at the beginning of 2010, when the was $1.50/£. The acquisition price exceeded the subsidiary's book value, and this excess was attributed
to intangibles with a life of 5 years, valued at £400,000, and . The subsidiary's functional currency is the pound. In 2015, the subsidiary reports income of £500,000 and pays no dividends. Goodwill impairment is £20,000. The beginning and ending exchange rates for 2015 are $1.60 and $1.70, respectively, and the average rate for 2015 is $1.65. The U.S. parent uses the equity method to account for its investment on its own books. The parent's equity method income accrual for 2015 is
a. $660,000.
b. $720,000.
c. $792,000.
d.$825,000. Goodwill
Goodwill is an important concept and terminology in accounting which means good reputation. The word goodwill is used at various places in accounting but it is recognized only at the time of a business combination. There are generally two types of... Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...