2. On January 1, 2016, the Ben Company formed a foreign subsidiary. On February 15, 2016, Ben’s subsidiary purchased 100,000 local currency units (LCU) of inventory; 25,000 LCU of the original inventory made up the entire inventory on December 31, 2016. The subsidiary’s functional currency is the U.S. dollar. The exchange rates were 2.2 LCU to $1 from January 1, 2016, to June 30, 2016, and 2 LCU to $1 from July 1, 2016, to December 31, 2016.

The December 31, 2016, inventory balance for Ben’s foreign subsidiary should be remeasured into U.S. dollars in the amount of:

a $10,500 b $11,364 c $11,905 d $12,500 Foreign Currency Financial Statements 495