A wholly owned subsidiary of Ward, Inc. has certain expense accounts for the year ended December 31, 2006, stated in local currency units (LCU) as follows:
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|
LCU |
|
|
Depreciation of equipment (related assets were purchased January 1, 2004) |
120,000 |
|
Provision for doubtful accounts |
80,000 |
|
Rent |
200,000 |
The exchange rates at various dates are as follows:
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|
Dollar equivalent of 1 LCU |
|
|
December 31, 2006 |
$.40 |
|
Average for year ended 12/31/06 |
.44 |
|
January 1, 2004 |
.50 |
Assume that the LCU is the subsidiary’s functional currency and that the charges to the expense accounts occurred approximately evenly during the year. What total dollar amount should be included in Ward’s 2006 consolidated income statement to reflect these expenses?
- $160,000
- $168,000
- $176,000
- $183,200