Question
A wholly-owned foreign subsidiary of Wrangler Incorporated maintains its financial statements in the euro. At the beginning of last year, the subsidiary purchased equipment for
A wholly-owned foreign subsidiary of Wrangler Incorporated maintains its financial statements in the euro. At the beginning of last year, the subsidiary purchased equipment for 2.4 million. At the beginning of this year, the subsidiary purchased more equipment for 1.2 million. The $ / exchange rate changed evenly over the last two years as follows:
Beginning of last year | $1.20 |
Beginning of this year | $1.30 |
End of this year | $1.40 |
The equipment is depreciated on a straight-line basis over 5 years with no salvage value. Calculate the amount of depreciation expense Wrangler should report this year in its consolidated financial statements assuming the subsidiarys functional currency and Wranglers presentation currency are both the U.S. dollar.
A) $888,000.
B) $936,000.
C) $924,000.
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