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Clarke Corp subsidiary: Report foreign currency on consolidated balance sheet

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A Clarke Corporation subsidiary buys marketable equity securities and inventory on April 1, 2009, for 100,000 pesos each. It pays for both items on June 1, 2009, and they are still on hand at year-end. Inventory is carried at cost under the lower-of-cost-or-market-rule. Currency exchange rates for 1 peos follow:

Jan 1 2009 $0.15 = 1 peso
Apr 1, 2009 $0.16 = 1
Jun 1, 2009 $0.17 = 1
Dec 1, 2009 $0.19 = 1

A. Assume that the peso is the subsidiary's functional currency. What balances does a consolidated balance sheet report as of December 31, 2009?

B. Assume that the U.S. dollar is the subsidiary's functional currenty. What balances does a consolidated balance sheet report as of December 31, 2009?

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Solution Summary

The expert reports foreign currency on consolidated Clarke Corp subsidiary.

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ANSWERS

Note: I assumed that the Dec 1, 2009 $0.19 = 1 is ACTUALLY Dec 31, 2009 $0.19 = 1

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