Certain balance sheet accounts of a foreign subsidiary of Orchid Company have been stated in U.S. dollars as follows: Current RatesHistorical RatesAccounts receivable, current$ 235,000$255,000Accounts receivable, long term142,000149,000land71,00074,000Patents101,000106,000 $ 549,000$ 584,0001. This subsidiary’s functional currency is a foreign currency. What total should Orchid’s balance sheet include for the preceding items?$557,000.$554,000.$564,000.$549,000.2. This subsidiary’s functional currency is the U.S. dollar. What total should Orchid’s balance sheet include for the preceding items?$554,000.$557,000.$564,000.$549,000

Here, Functional currency is foreign currency, all assets measured at current rate.

Answered: Certain balance sheet accounts of a…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Certain balance sheet accounts of a foreign subsidiary of Orchid Company have been stated in U.S. dollars as follows:

	Current Rates	Historical Rates
Accounts receivable, current	$ 235,000	$255,000
Accounts receivable, long term	142,000	149,000
land	71,000	74,000
Patents	101,000	106,000
	$ 549,000	*$ 584,000*

1. This subsidiary’s functional currency is a foreign currency. What total should Orchid’s balance sheet include for the preceding items?
$557,000.
$554,000.
$564,000.
$549,000.

2. This subsidiary’s functional currency is the U.S. dollar. What total should Orchid’s balance sheet include for the preceding items?
$554,000.
$557,000.
$564,000.
$549,000

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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