Question
22. A subsidiary of Reynolds Inc., a U.S. company, was located in a foreign country. The local currency of this subsidiary was the Euro ()
22. A subsidiary of Reynolds Inc., a U.S. company, was located in a foreign country. The local currency of this subsidiary was the Euro () while the functional currency of this subsidiary was the U.S. dollar. The subsidiary acquired Equipment A on January 1, 2018, for 250,000. Depreciation expense associated with Equipment A was 25,000 per year. On January 1, 2020, the subsidiary acquired Equipment B for 150,000 and Equipment B had associated depreciation expense of 10,000. The subsidiary owned no other depreciable assets. Currency exchange rates between the U.S. dollar and the Euro were as follows:
| January 1, 2018 | 1 | = | $ | 1.20 | |
| December 31, 2018 | 1 | = | $ | 1.14 | |
| 2018 Average | 1 | = | $ | 1.18 | |
| January 1, 2019 | 1 | = | $ | 1.15 | |
| December 31, 2019 | 1 | = | $ | 1.21 | |
| 2019 Average | 1 | = | $ | 1.18 | |
| January 1, 2020 | 1 | = | $ | 1.26 | |
| December 31, 2020 | 1 | = | $ | 1.30 | |
| 2020 Average | 1 | = | $ | 1.28 | |
What amount would have been reported for depreciation expense related to the equipment owned by the subsidiary in Reynoldss consolidated balance sheet at December 31, 2018?
Multiple Choice
-
$28,500.
-
$30,000.
-
$12,000.
-
$11,800.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
International Financial Reporting Standards ImplementationA Global Experience
Authors: Mohammad Nurunnabi
1st Edition
1801174415, 9781801174411
