On January 1, Dandu Corporation started a subsidiary in a foreign country. On April 1, the subsidiary purchased inventory at a cost of 120,000 local currency units (LCU). One-fourth of this inventory remained unsold at the end of the year while 40 percent of the liability from the purchase had not yet been paid. The exchange rates for $1 were as follows:
January 1 | $1=2.5 LCU |
April 1 | 1 = 2.8 |
Average for the current year | 1 = 2.7 |
December 31 | 1=3.0 |
What should be the December 31 Inventory and Accounts Payable balances for this foreign subsidiary as translated into U.S. dollars using the current rate method?
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