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r-ruslan [8.4K]
3 years ago
12

A foreign subsidiary of Thun Corporation has one asset (inventory) and no liabilities. The functional currency for this subsidia

ry is the yuan. The inventory was acquired for 100,000 yuan when the exchange rate was $0.16 = 1 yuan. Consolidated statements are to be produced, and the current exchange rate is $0.12 = 1 yuan. Which of the following statements is true for the consolidated financial statements?
a. A remeasurement gain must be reported.
b. A positive translation adjustment must be reported.
c. A negative translation adjustment must be reported.
d. A remeasurement loss must be reported.
Business
1 answer:
Mrrafil [7]3 years ago
7 0

Answer: c. A negative translation adjustment must be reported

Explanation:

The Consolidated financial statements will need to be translated to reflect the depreciation in the Yuan. Seeing as the Yuan is the functional currency, it needs to be translated by the current rate.

The Yuan dropped in value, that means that the inventory dropped in value as well.

For this reason, the corrective measure is a NEGATIVE TRANSACTION ADJUSTMENT in the Consolidated books.

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In the five C's, how is cost different from price?
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Although many factors affect the value of real property, what is the primary driver in determining the value of real property?
garri49 [273]

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Supply and Demand

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Assume the spot Swiss franc is $0.7000 and the six-month forward rate is $0.6950. What is the minimum price that a six-month Ame
Rama09 [41]

Answer:

2 cents

Explanation:

The spot price = $0.7000 = 70 cents, The forward rate = $0.6950 = 69.5 cents and the call option with striking price = $0.6800 = 68.00 cents

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The minimum price = Maximum (spot price - striking price, (forward rate - striking price) / (1 + 0.0175), 0) = Maximum(70 - 68, (69.5 - 68)/ 0.0175, 0)

Minimum price = Maximum (2 , 1.47, 0) = 2 cents

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3 years ago
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