Facts: U.K. subsidiary had identical sales revenue in 20X1 & 20X2 U.K. subsidiary had 25% gross profit
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Question:
Facts:
- U.K. subsidiary had identical sales revenue in 20X1 & 20X2
- U.K. subsidiary had 25% gross profit margin in 20X1 & 20X2
- U.K. subsidiary accounts for inventory using FIFO
- GBP rising against USD throughout 20X1 & 20X2
Question:
- Using the temporal rate method to translate the 20X2 British subsidiary's financial statements into U.S. dollars
- Is the U.S. dollar gross profit margin higher or lower than the GBP gross profit margin in 20X2.
- How do these compare to each other?
Expert Answer:
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