Lancer, Inc., starts a subsidiary in a foreign country on January 1, 2010. The following account balances for the year ending December 31, 2011, are stated in kanquo (KQ), the local currency: 

Lancer is preparing account balances to produce consolidated financial statements.

a. Assuming that the kanquo is the functional currency, what exchange rate would be used to report each of these accounts in U.S. dollar consolidated financial statements?

b. Assuming that the U.S. dollar is the functional currency, what exchange rate would be used to report each of these accounts in U.S. dollar consolidated financial statements?

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Sales Inventory (bought on 3/1/11) KQ 200,000 100,000 Equipment (bought on 1/1/10) 80,000 Rent expense 10,000 Dividends (paid on 10/1/11) 20,000 Notes receivable (to be collected in 2014) 30,000 Accumulated depreciation equipment 24,000 Salary payable...... 5,000 Depreciation expense 8,000 The following exchange rates for $1 are applicable: January 1, 2010 January 1, 2011 March 1, 2011 October 1, 2011 December 31, 2011 Average for 2010 Average for 2011 13 KQ 18 19 21 22 14 20