Question
On January 1, the wholly-owned Mexican affiliate of a Canadian parent company acquired an inventory of computer hard drives for its assembly operation. The cost
On January 1, the wholly-owned Mexican affiliate of a Canadian parent company acquired an inventory of computer hard drives for its assembly operation. The cost incurred was 15,000,000 pesos when the exchange rate was MXN11.3 = C$1. By year- end, the Mexican affiliate had used three- fourths of the acquired hard drives. Due to advances in hardware technology, the remaining inventory was marked down to its net realizable value of MXN1,750,000. The year-end exchange rate was MXN12.3 = C$1. The aver- age rate during the year was MXN11.8 = C$1. ?Required:
Would your answer change if the functional currency were the Canadian dollar? Please explain.
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