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A U.S. firm has total assets valued at £318,000 located in London. This valuation did not change from last year. Last year, the exchange rate was £.61 = $1. Today, the exchange rate is £.63 = $1. By what amount did these assets change in value on the firm's U.S. financial statements?

Respuesta :

sadddamkashmiri801

Answer:

$16,520

Explanation:

At the end of last year:

£.61 = $1

which means

£1 = $1 / 0.61 = $1.6393 per Great Britain Pound

By multiplying £318,000 on both sides, we have:

£318,000 = $1.6393 per Great Britain Pound * £318,000

£318,000 = $521,311

This is the last year value of the investment.

Today:

£.63 = $1

which means

£1 = $1 / 0.63 = $1.5873 per Great Britain Pound

By multiplying £318,000 on both sides, we have:

£318,000 = $1.5873 per Great Britain Pound * £318,000

£318,000 = $504,762

This is the value of the investment today.

Now the increase / decrease in the value of the firm is given as under:

Increase or Decease in investment value =  $521,311 - $504,762

= $16,520 Decrease in value

The value of the firm has been decreased by $16,520

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