Lancer, Inc. (a U.S.-based company), establishes a subsidiary in Croatia on January 1, 2019. The following account balances for the year ending December 31, 2020, are stated in kuna (K), the local currency: Sales K 330,000 Inventory (bought on 3/1/20) 181,500 Equipment (bought on 1/1/19) 86,000 Rent expense 22,000 Dividends (declared on 10/1/20) 28,000 Notes receivable (to be collected in 2023) 49,000 Accumulated depreciation—equipment 25,800 Salary payable 7,600 Depreciation expense 8,600 The following U.S.$ per kuna exchange rates are applicable: January 1, 2019 $0.32 Average for 2019 0.33 January 1, 2020 0.37 March 1, 2020 0.38 October 1, 2020 0.40 December 31, 2020 0.41 Average for 2020 0.39 Lancer is preparing account balances to produce consolidated financial statements. Assuming that the kuna is the functional currency, what exchange rate would be used to report each of these accounts in U.S. dollar consolidated financial statements? Assuming that the U.S. dollar is the functional currency, what exchange rate would be used to report each of these accounts in U.S. dollar consolidated financial statements?
Lancer, Inc. (a U.S.-based company), establishes a subsidiary in Croatia on January 1, 2019. The following account balances for the year ending December 31, 2020, are stated in kuna (K), the local currency: Sales K 330,000 Inventory (bought on 3/1/20) 181,500 Equipment (bought on 1/1/19) 86,000 Rent expense 22,000 Dividends (declared on 10/1/20) 28,000 Notes receivable (to be collected in 2023) 49,000 Accumulated depreciation—equipment 25,800 Salary payable 7,600 Depreciation expense 8,600 The following U.S.$ per kuna exchange rates are applicable: January 1, 2019 $0.32 Average for 2019 0.33 January 1, 2020 0.37 March 1, 2020 0.38 October 1, 2020 0.40 December 31, 2020 0.41 Average for 2020 0.39 Lancer is preparing account balances to produce consolidated financial statements. Assuming that the kuna is the functional currency, what exchange rate would be used to report each of these accounts in U.S. dollar consolidated financial statements? Assuming that the U.S. dollar is the functional currency, what exchange rate would be used to report each of these accounts in U.S. dollar consolidated financial statements?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
100%
Lancer, Inc. (a U.S.-based company), establishes a subsidiary in Croatia on January 1, 2019. The following account balances for the year ending December 31, 2020, are stated in kuna (K), the local currency:
| Sales | K | 330,000 |
| Inventory (bought on 3/1/20) | 181,500 | |
| Equipment (bought on 1/1/19) | 86,000 | |
| Rent expense | 22,000 | |
| Dividends (declared on 10/1/20) | 28,000 | |
| Notes receivable (to be collected in 2023) | 49,000 | |
| 25,800 | ||
| Salary payable | 7,600 | |
| Depreciation expense | 8,600 | |
The following U.S.$ per kuna exchange rates are applicable:
| January 1, 2019 | $0.32 |
| Average for 2019 | 0.33 |
| January 1, 2020 | 0.37 |
| March 1, 2020 | 0.38 |
| October 1, 2020 | 0.40 |
| December 31, 2020 | 0.41 |
| Average for 2020 | 0.39 |
Lancer is preparing account balances to produce consolidated financial statements.
-
Assuming that the kuna is the functional currency, what exchange rate would be used to report each of these accounts in U.S. dollar consolidated financial statements?
-
Assuming that the U.S. dollar is the functional currency, what exchange rate would be used to report each of these accounts in U.S. dollar consolidated financial statements?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education