Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Streep Inc. is a U. S. based multinational firm with a subsidiary in Switzerland. Last week, Streep created its periodic financial statements, and the subsidiary

Streep Inc. is a U. S. based multinational firm with a subsidiary in Switzerland. Last week, Streep created its periodic financial statements, and the subsidiary had SFR80,000 worth of inventory on its balance sheet. Streep translated the value of inventory using the spot exchange rate at the time os $0.8153/SFr and recorded that value on its condolidated balance sheet. However, this week the exchange rate changed dramatically to $0.9225/SFr. The subsidiary still has the same amount of inventory (valuued at SFr 80,000).

If the firm were to create a new consolidated balance sheet and translate the value of its inventory at the new spot exchange rate, what would happen to the dollar value of inventory?

It would increase/decrease by how much?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Dark Side Of Valuation

Authors: Aswath Damodaran

3rd Edition

0134854101, 9780134854106

More Books

Students also viewed these Finance questions

Question

fritenti

Answered: 1 week ago

Question

identify sources of secondary data across organisations;

Answered: 1 week ago