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Us dollar gross profit margin higher

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Reference no: EM132682171

Facts: U.K. subsidiary had identical sales revenue in 20X1 & 20X2

  • U.K. subsidiary had 25% gross profit margin in 20X1 & 20X2
  • U.K. subsidiary accounts for inventory using FIFO
  • GBP rising against USD throughout 20X1 & 20X2

Question:

  • Using the temporal rate method to translate the 20X2 British subsidiary's financial statements into U.S. dollars
  • Is the U.S. dollar gross profit margin higher or lower than the GBP gross profit margin in 20X2.
  • How do these compare to each other?

Reference no: EM132682171

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