Certain balance sheet accounts of a foreign subsidiary of the Rose Co. had been stated in U. S. dollars as follows: Stated at Current Rates Historical Rates Accounts receivable—current $ 280,000 $ 308,000 Accounts receivable—long term 140,000 154,000 Prepaid insurance 70,000 77,000 Goodwill 112,000 119,000 Totals $ 602,000 $ 658,000 If the subsidiary's local currency is its functional currency, what total amount should be included in Tulip's balance sheet in U. S. dollars? $658,000. $609,000. $616,000. $602,000.

$602,000

Explanation:

Since the foreign currency is the functional currency in this case, what is required to be done is the translation of the balance sheet accounts, not a remeasurement of the accounts.

The guiding principle is that when the financial statement of subsidiary is prepared using functional currency, assets and liabilities should be translated using the current rates.

Since $602,000 is the total using the current in the question, the total amount that should be included in Tulip's balance sheet in U.S. dollars is therefore $602,000.

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