Homework Answers
Answer:
a) The dollar amount in the ending inventory is $14025
b) The amount of inventory shown on balancesheet is $10625 (14025-3400 intercompany profit)
Working Notes:
The rate of exchange at initial inventory transfer is $1.60 = £1
| Working | US Dollar | British Pounds | |
| Selling price | 13200/1.60=£8250 | $13200 | £8250 |
| Cost to parent | ($9800) | ||
| Intercompany profit | $3400 |
The rate of exchange at initial inventory transfer is $1.70 = £1
| Working | US Dollar | British Pounds | |
| Inventory translation | 8250*1.70 =14025 | $14025 | £8200 |
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