Answer to Question #197668 in Accounting for Milan

Question

The controller of Pane Co. was preparing the company's financial statements. Pane had a

wholly owned subsidiary in a foreign country that used the euro as its currency. At December

31, the exchange rate was $1 U.S. for 1.25 euro. The weighted-average exchange rate for the

year was $1 U.S. for 1.50 euro. At December 31, the subsidiary had assets of 1 million euro and

revenue for the year of 2 million euro. What amounts would assets and revenue translate for

consolidation?

Assets Revenue

A. $666,666 $1,333,333

B. $666,666 $1,600,000

C. $800,000 $1,333,333

D. $800,000 $1,600,000

Answer 1

Assets would be translated at the exchange rate of December 31.

Revenue would be translated at the weighted-average exchange rate.

Amount at which asset translate for consolidation=$800,000

Amount at which revenue translate for consolidation=$1,333,333

Therefore the answer is Option C.