Question

Lancer, Inc. (a U.S.-based company), establishes a subsidiary in a foreign country on January 1, 2016. The following account balances for the year ending December 31, 2017, are stated in kanquo (KQ), the local currency: Sales KQ 390,000 Inventory (bought on 3/1/17) 214,500 Equipment (bought on 1/1/16) 98,000 Rent expense 26,000 Dividends (declared on 10/1/17) 32,000 Notes receivable (to be collected in 2020) 55,000 Accumulated depreciation—equipment 29,400 Salary payable 8,800 Depreciation expense 9,800 The following U.S.$ per KQ exchange rates are applicable: January 1, 2016 $0.38 Average for 2016 0.39 January 1, 2017 0.43 March 1, 2017 0.44 October 1, 2017 0.46 December 31, 2017 0.47 Average for 2017 0.45 Lancer is preparing account balances to produce consolidated financial statements. Assuming that the kanquo 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? (Round your answers to 2 decimal places.)

Answer 1

The kanquo is the functional currency, what exchange rate would be used to report each of these accounts in U.S. dollar consolidated financial statements:

Particulars	Rate	Explanation
Sales	0.45	Average rate is acceptable
Inventory	0.47	Closing rate
Equipment	0.47	Closing rate
Rent expense	0.45	Average rate is acceptable
Dividends	0.46	Dividend are recoreded at the issued date
Notes receivable	0.47	Closing rate
Accumulated depreciation	0.47	Closing rate
Salary payable	0.47	Closing rate
Depreciation expense	0.45	Average rate is acceptable

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:

Particulars	Rate	Explanation
Sales	0.45	Average rate is acceptable
Inventory	0.44	march,1 from cateurrent year
Equipment	0.38	bought on 1/1/16(Equipment purchase date)
Rent expense	0.45	Average rate is acceptable
Dividends	0.46	Dividend are recoreded at the issued date
Notes receivable	0.47	Closing date
Accumulated depreciation	0.38	Equipment purchase date
Salary payable	0.47	Closing date
Depreciation expense	0.38	Equipment purchase date