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Tea Co. holds investments in several subsidiaries. One of these, Chin Co., is located in China. Chin Co. prepares its financial statements in its local

Tea Co. holds investments in several subsidiaries. One of these, Chin Co., is located in China. Chin Co. prepares its financial statements in its local currency, the Yuan. Several years ago, when the exchange rate was 5.5 Yuan = $1, Chin Co. purchased land at a cost of 2 million Yuan. On 1 June 20X8, when the exchange rate was 5 Yuan = $1 the land was revalued at a fair value of 2 500 000 Yuan. The exchange rate at the group's year end, 31 December 20X8, was 4.5 crowns = $1. In accordance with the requirements of IAS 21 The Effects of Changes in Foreign Exchange Rates, at what value should the land be recognised in Tea Co.'s group financial statements at 31 December 20X8?

Select one:

a.

$555 556

b.

$454 545

c.

$444 444

d.

$500 000

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