A Subsidiary of Reynolds Inc

Multiple Choice

A subsidiary of Reynolds Inc., a U.S. company, was located in a foreign country. The local currency of this subsidiary was the Euro (€) while the functional currency of this subsidiary was the U.S. dollar. The subsidiary acquired Equipment A on January 1, 2018, for €250,000. Depreciation expense associated with Equipment A was €25,000 per year. On January 1, 2020, the subsidiary acquired Equipment B for €150,000 and Equipment B had associated depreciation expense of €10,000. The subsidiary owned no other depreciable assets. Currency exchange rates between the U.S. dollar and the Euro were as follows: What amount would have been reported for depreciation expense related to the equipment owned by the subsidiary in Reynolds's consolidated balance sheet at December 31, 2018?

A) $29,500.
B) $28,500.
C) $30,000.
D) $12,000.
E) $11,800.