US-based multinational with subsidiaries around the world

August 5, 2017
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August 10, 2017
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US-based multinational with subsidiaries around the world

Redline Products, Inc. is a US-based multinational with subsidiaries around the world. One such subsidiary,  Acceletron, operates in Singapore, which has seen mild but not excessive rates

of inflation.  Acceletron was acquired in 2000 and has never paid a dividend. It records inventory

using the FIFO method. Chief Financial Officer Margot Villiers was asked by Redline’s board of directors to explain how the functional currency selection and other accounting choices affect  Redline’s consolidated financial statements. Villiers gathers Acceletron’s financial statements denominated in Singapore dollars (SGD) in Exhibit 1 and the US dollar/Singapore dollar exchange rates in Exhibit 2. She

does not intend to identify the functional currency actually in use but rather to use Acceletron as an example of how the choice of functional currency affects the consolidated statements.


If Acceletron’s financial statements are translated into US dollars using the temporal method, Redline’s consolidated financial statements will most likely include Acceletron’s:

A. USD336 million in inventory.

B. USD956 million in fixed assets.

C. USD152 million in accounts receivable.

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