Advanced Accounting 10th Edition by Thomas Schaefer, Joe Ben Hoyle, Timothy Doupnik

Exercise 8

Problems 10 and 11 are based on the following information.
A Clarke Corporation subsidiary buys marketable equity securities and inventory on April 1, 2011, for 100,000 pesos each.It pays for both items on June 1, 2011, and they are still on hand at year-end.Inventory is carried at cost under the lower-of-cost-or-market rule.Currency exchange rates for 1 peso follow:
Assume that the U.S.dollar is the subsidiary's functional currency.What balances does a consolidated
balance sheet report as of December 31, 2011
a.Marketable equity securities = $16,000 and Inventory = $16,000.
b.Marketable equity securities = $17,000 and Inventory = $17,000.
c.Marketable equity securities = $19,000 and Inventory = $16,000.
d.Marketable equity securities = $19,000 and Inventory = $19,000.