Problem:
Darron Co. was formed on January 1, 2007 as a wholly owned foreign subsidiary of a U.S. corporation. Darron's functional currency was the stickle (§). The following transactions and events occurred during 2007:
Jan 1 Darron issued common stock for §1,000,000
June 30 Darron paid dividends of §20,000
Dec 31 Darron reported net income §80,000 for the year
Exchange rates for 2007 dollar to sickle were
Jan 1 $1 = §.48
June 30 $1 = §.46
Dec 31 $1 = §.42
Weighted avg. rate for the year $1 = §.44
What exchange rate should have been used in translating Darron's revenues and expenses for 2007?
A) $1 = §.48.
B) $1 = §.44.
C) $1 = §.46.
D) $1 = §.42.
E) $1 = §.45.