a US company owns 80% of interest in a company located on Mars. Martian currency is called The Martian credit during the year the parent company sold inventory that had a cost of 24500 to the subsidiary on account for 28,500 when the exchange was 0.519 to the subsidiary still held one half of the inventory and had not paid the parent company for purchase at the end of the physical year. The unsettled account is denominated in dollars the exchange rate at the fiscal year and was 0.4994 compute the amounts that would be reported for inventory and accounts payable in the subsidiary translated balance sheet the entities functional currency is the Martian credit

The amounts reported for inventory and accounts payable on the subsidiary translated balance sheet are 18,619 Martian credits and 14,217 Martian credits, respectively.

A US-based company that has an 80% stake in a Martian company has to report the assets, liabilities, and equity of its subsidiary on its consolidated financial statements in US dollars. The Martian currency is known as the Martian credit. During the year, the parent company sold inventory with a cost of 24500 to the subsidiary on account for 28,500 when the exchange rate was 0.519 to the subsidiary.

One-half of the inventory still belongs to the subsidiary, and at the end of the physical year, the subsidiary had not paid for the purchase.The account that remained unpaid is denominated in dollars, and the exchange rate was 0.4994 at the end of the fiscal year.

The functional currency of the company is Martian credit, and the dollar amount of the balance sheet needs to be translated into the Martian currency. In order to calculate the inventory and accounts payable, we will use the current rate method. The first step in the calculation is to find the closing rate of the Martian credit to the US dollar.Exchange rate at the fiscal year-end: $1 = 0.4994

Martian creditThe amount reported for inventory on the subsidiary translated balance sheet can be calculated as follows:

Beginning inventory: 12,250 (since the subsidiary still holds one half of the inventory)

Cost of inventory sold to the subsidiary: 24,500

Closing rate of the Martian credit to the US dollar: 0.4994

Martian credit reported inventory = (12,250 + 24,500) × 0.4994 = 18,619

Martian credits The amount reported for accounts payable on the subsidiary translated balance sheet can be calculated as follows:

Beginning accounts payable: 0Amount owed to parent company: 28,500

Closing rate of the Martian credit to the US dollar: 0.4994

Martian credit reported accounts payable = (0 + 28,500) × 0.4994 = 14,217 Martian credits

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