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ABC Inc has a single wholly-owned American subsidiary called US1 based in Los Angeles,California which was acquired January 1,2014.US1 submitted its financial statements for 2014 to ABC.Selected exchange rates in effect throughout 2014 are shown below: US1 Financial Results for 2014 were as follows: Balance Sheet For questions 17 through 22,inclusively,assume that US1 is considered to be a self-sustaining subsidiary.
-Which of the following rates would be used to translate the company's dividends?
A)$1CDN=$0.815 U.S.
B)$1CDN=$0.8125 U.S.
C)$1CDN=$0.8250 U.S.
D)$1CDN=$0.83 U.S.

Question

The following information pertains to questions 
ABC Inc has a single wholly-owned American subsidiary called US1 based in Los Angeles,California which was acquired January 1,2014.US1 submitted its financial statements for 2014 to ABC.Selected exchange rates in effect throughout 2014 are shown below:  US1 Financial Results for 2014 were as follows:  Balance Sheet  For questions 17 through 22,inclusively,assume that US1 is considered to be a self-sustaining subsidiary.
-Which of the following rates would be used to translate the company's dividends?
A)$1CDN=$0.815 U.S. 
B)$1CDN=$0.8125 U.S. 
C)$1CDN=$0.8250 U.S. 
D)$1CDN=$0.83 U.S.

Quizplus · Accepted Answer

Since US1 is a self-sustaining subsidiary, its dividends would be translated at the average exchange rate for the year, which is $1CDN=$0.8125 U.S.

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