Reference no: EM131593623

Question: Redline Products, Inc. is a US-based multinational with subsidiaries around the world. One such subsidiary, Acceletron, operates in Singapore, which has seen mild but not excessive rates of inflation. Acceletron was acquired in 2000 and has never paid a dividend. It records inventory using the FIFO method. Chief Financial Officer Margot Villiers was asked by Redline's board of directors to explain how the functional currency selection and other accounting choices affect Redline's consolidated financial statements. Villiers gathers Acceletron's financial statements denominated in Singapore dollars (SGD) in Exhibit 1 and the US dollar/Singapore dollar exchange rates in Exhibit 2. She does not intend to identify the functional currency actually in use but rather to use Acceletron as an example of how the choice of functional currency affects the consolidated statements.

Compared with using the Singapore dollar as Acceletron's functional currency for 2007, if the US dollar were the functional currency, it is most likely that Redline's consolidated:

A. inventories will be higher.

B. receivable turnover will be lower.

C. fixed asset turnover will be higher.