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WXY Corporation, a U.S. parent firm, has a wholly owned sales affiliate, ABD Ltd., in the United Kingdom. The affiliate was established to service the
WXY Corporation, a U.S. parent firm, has a wholly owned sales affiliate, ABD Ltd., in the United Kingdom. The affiliate was established to service the local market. Assume that 1. the functional currency of AB is the pound. 2. the reporting currency is the dollar. 3. the initial exchange rate $1.00=0.67. ABD's nonconsolidated balance sheets and the footnotes to the financial statements indicate that ABD owes the parent firm 200,000. Assume that, WXY had made an investment of $500,000 in the affiliate. Under FASB 52, the intercompany debt and investment will appear on the consolidated balance sheet as A) 200,000 B) $201,493 C) $298,507 D) $798,507 D) B) A) C)
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