Assume that U.S. parent company ABC has a subsidiary, XYZ, located in Germany. XYZ's assets, stated in euros, are as follows:
Cash and receivables 500,000
Inventory 500,000
Fixed assets (net) 900,000
The relevant exchange rates, in euros per USD 1.00, are:
Euros 1.6800 closing rate on the balance sheet date
Euros 1.5500 exchange rate when the fixed assets were acquired
Euros 1.6300 average exchange rate for the period
Euros 1.6600 average exchange rate when ending inventory was acquired.
What is the total translated or remeasured book value of the assets if the functional currency is the U.S. dollar?
a. $1,130,952
b. $1,179,469
c. $1,175,883
d. $1,185,012