Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

[12:44, 11/2/2018] Diana Flores Conta: Gunther Co. established a subsidiary in Mexico on January 1, 2011. The subsidiary engaged in the following transactions during 2011:

[12:44, 11/2/2018] Diana Flores Conta: Gunther Co. established a subsidiary in Mexico on January 1, 2011. The subsidiary engaged in the following transactions during 2011:

January 1 : Sold common stock to Gunther for 5,000,000 pesos . Purchased inventory throughout the year, 8,000,000 pesos (1/4 remained at year end). Sales for year totaled 12,000,000 pesos.

Dec 31 : Purchased equipment for 1,000,000 pesos

Gunther concluded that the subsidiary's functional currency was the dollar. Exchange rates for 2011 were:

Jan 1 : 1 peso = $.20

Jan 31 : 1 peso = $.19

Dec 31 : 1 peso = $.16

Weighted Average For Year = 1 peso = $.18

Question :

What amount of foreign exchange gain or loss would have been recognized in Gunther's consolidated income statement for 2011?

A. $800,000 gain.

B. $760,000 gain.

C. $320,000 loss.

D. $280,000 loss.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fundamental Managerial Accounting Concepts

Authors: Thomas Edmonds

6th Edition

78110890, 978-0078110894

More Books

Students also viewed these Accounting questions

Question

According to the text, what makes a person successful?

Answered: 1 week ago

Question

5. Give some examples of hidden knowledge.

Answered: 1 week ago