ACC$337-$ Roosevelt University

Chapter $7$

The year $1$ financial statements of the Chinese subsidiary of Beta Limited

$($an Australian$-$based company$)$ revealed the following:

Chinese Yuan $($CNY$)$

Beginning inventory $600000$

Purchases $2000000$

Ending inventory $350000$

Cost of goods sold $2250000$

Australian dollar $($AUD$)$ exchange rates for $1$ CNY are as follows:

Date AUD

Beginning inventory $0\mathrm{.}225$ The beginning inventory was acquired in the last quarter of the previous year

January $1,$ Year $10\mathrm{.}229$

Average, year $10\mathrm{.}218$

Ending inventory $0\mathrm{.}210$ The ending inventory was acquired in the last quarter of the current year

December $31,$ Year $10\mathrm{.}207$

$1.$ Assuming that the current rate method is the appropriate method of translation,

determine the amounts at which the Chinese subsidiary's ending inventory and cost

of goods sold should be included in Beta's Year $1$ consolidated financial statements.

Current Rate Method

CNY Exchange Rate AUD

Cost of goods sold

Ending inventory

$2.$ Assuming that the temporal method is the appropriate method of translation,

determine the amounts at which the Chinese subsidiary's ending inventory and cost

of goods sold should be included in Beta's Year $1$ consolidated financial statements.

Temporal Method

CNY Exchange Rate AUD

Beginning inventory

Purchases

Ending inventory

Cost of goods sold

Ending inventory