Question Skin Corporation, a British subsidiary of Pin Corporation, declared and paid in dividends on November 1, 2023. Convert the dividends to US dollars using the appropriate exchange rate.
Studdy Solution
STEP 1
Assumptions
1. Pin Corporation is a U.S. company with a British subsidiary, Skin Corporation.
2. The initial investment in Skin Corporation is £450,000.
3. Skin Corporation purchased real estate for £500,000, with £100,000 allocated to land and £400,000 allocated to a building.
4. The building is depreciated over a 40-year life with no salvage value.
5. Skin Corporation has beginning inventory of £60,000 and ending inventory of £80,000.
6. Purchases during the year amounted to £170,000.
7. Ending inventory was acquired on September 20, 2023.
8. FIFO inventory method is used.
9. Dividends of £20,000 were declared and paid on November 1, 2023.
10. Exchange rates are provided for specific dates, with the average rate for 2023 being .
11. The functional currency for Skin Corporation is the US Dollar.
STEP 2
Identify the correct exchange rate to use for converting the Dividends account balance from British pounds to US dollars. Dividends are typically translated at the exchange rate in effect on the date they are declared.
STEP 3
Locate the exchange rate for the date when the dividends were declared, which is November 1, 2023.
STEP 4
The exchange rate on November 1, 2023, is .
STEP 5
Convert the Dividends account balance from British pounds to US dollars using the exchange rate from the date of declaration.
STEP 6
Plug in the values for the Dividends account balance and the exchange rate to calculate the US dollar amount.
STEP 7
Calculate the US dollar amount of the Dividends account balance.
The Dividends account balance in US dollars is 30400.
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