Question #15
Reading: Reading 10 Multinational Operations
PDF File: Reading 10 Multinational Operations.pdf
Page: 8
Status: Correct
Correct Answer: A
Question
The Schuldes Company had the following reported assets in euros at historical cost for the period ending December 31, 2005. Cash 134 Accounts receivable 270 Inventory 404 Net fixed assets 1347 Total assets 2155 The exchange rate per euro was $0.8734 on January 1, 2005 and $0.9896 on December 31, 2005. The average exchange rate for the year 2005 was $0.8925. The total assets of Schuldes using the current rate method are:
Answer Choices:
A. $1,923
B. $2,133
C. $2,178
Explanation
With the current rate method all balance sheet items except common stock use the
current exchange rate to translate the functional currency into the reporting currency.
2155 × $0.9896 = $2,133.