medium · Financial Accounting accounting-cycle-financial-statements
Tokyo Tech is a Japanese subsidiary of a US firm. Its functional currency is determined to be the US Dollar (USD), though its books are maintained in Japanese Yen (JPY). During the year, Tokyo Tech purchased equipment for ¥10,000,000 when the exchange rate was 120 JPY/USD. At year-end, the rate is 110 JPY/USD.
At what amount and rate should this equipment be reported on the consolidated balance sheet?
- The USD equivalent at the historical rate of 120 JPY/USD
- The USD equivalent at the current rate of 110 JPY/USD
- The USD equivalent at the weighted-average rate for the year
- The fair value in USD at the year-end spot rate
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