Reference no: EM133018499
Question - Sub Ltd., a British subsidiary of Parent Ltd., an Australian company, showed cost of goods sold on its income statement for the year ended December 31, 20x1.
Inventory, 1/1/20x1 £200,000
Purchases for 20x1 1,800,000
Cost of Goods Available for Sale 2,000,000
Inventory, 31/12/20x1 400,000
Cost of Goods Sold £ 1,600,000
Exchange rates A$/£
December 31, 20x0 $0.560
December 31, 20x1 $0.522
Average for 20x1 $0.547
1. What amount should be used to consolidate Sub's cost of goods sold into Parent's income statement under the current rate method?
A) $875,200
B) $835,200
C) $896,000
D) $887,800
2. What amount should be used to consolidate Sub's cost of goods sold into Parent's income statement under the temporal method, assuming ending inventory was purchased on the last day of the year?
A) $896,000
B) $875,200
C) $865,000
D) $887,800
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