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184 FAR617117 in preparing consolidated financial statements of a U.S. parent company with a foreign subsidiary, the foreign subsidiary's functional currency is the currency In

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184 FAR617117 in preparing consolidated financial statements of a U.S. parent company with a foreign subsidiary, the foreign subsidiary's functional currency is the currency In which the subsidiary maintains its accounting records. of the country in which the subsidiary is located. of the country in which the parent is located of the environment in which the subsidiary primarily generates and expends cash, Financial Accounting & Reporting McQ Mileage Options (a), (b) and (d) are incorrect because these are arbitrary figures. PFAR617015 154 On January 1, 20X5, Polk Corp. and Strass Corp. had condensed balance sheets as follows: Polk Strass Current assets $70,000 $20,000 Non-current assets $90,000 $40,000 Total assets $160,000 $60,000 Current liabilities $30,000 $10,000 Long-term debt $50,000 Stockholders' equity $80,000 $50,000 Total liabilities and stockholders' equity $160,000 $60,000 On January 2 20x5, Polk borrowed S60,000 and used the proceeds to purchase 90% of the outstanding common shares of Strass. This debt is payable in ten equal annual principal payments, plus interest, beginning December 30, 20X5. The excess cost of the investment over Strass' book value of acquired net assets should be allocated 60% to inventory and 40% to goodwill. On January 1, 20x5, the fair value of Polk shares held by noncontrolling parties was $10,000. On Polk's January 2, 20x5 consolidated balance sheet, Current liabilities should be $50,000 $46,000 $40,000 $30,000

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