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As of December 31, 2020 Big USA Company owns a foreign subsidiary (Taco) based in Mexico....

As of December 31, 2020 Big USA Company owns a foreign subsidiary (Taco) based in Mexico. Big is in the process of preparing consolidated financial statements and must translate the trial balance of Taco to U.S. Dollars. Selected financial information of Taco in pesos is presented below.

                                                                                       Pesos

Inventory 12/31/20                                                       300,000

Purchases in 2020                                                         2,600,000

Inventory 12/31/19                                                       420,000

Equipment purchased as follows

            1/1/18                                                             250,000                        

            Purchases during 2018                                      150,000

            Purchases during 2019                                     350,000

            Purchases during 2020                                     620,000

All equipment is depreciated over 8 years on a straight-line basis with a full year taken in year of acquisition.

The inventory turnover rate is 90 days.

Relevant Exchange Rates                                Pesos per dollar

                       

1/1/18                                                                          8.0

Average Rates 2018                                                       8.5

Average Rate   2019                                                      9.3

Average Rate 2020                                                        9.8

Rate 4th quarter 2019                                                     8.9

Rate 4th quarter 2020                                                     9.6

Current rate 12/31/18                                                   8.9

Current Rate 12/31/19                                                  9.2

Current Rate 12/31/20                                                 9.9

REQUIRED (In US Dollars)

  1. Assuming the U.S. Dollar is functional currency determine following

            Cost Goods Sold for 2020

            Balance in Equipment 12/31/20

            Balance in Accumulated Depreciation 12/31/20

            Depreciation Expense – 2020

  1. Assuming the Peso is functional currency determine following

            Cost Goods Sold for 2020

            Balance in Equipment 12/31/20

            Balance in Accumulated Depreciation 12/31/20

            Depreciation Expense – 2020

Solutions

Expert Solution


ekkarill92 answered 2 years ago
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