A Clarke Corporation subsidiary buys marketable equity
securities and inventory on April 1, 2015, for 100,000 pesos each.
It pays for both items on June 1, 2015, 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:

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  January 1, 2015 $ 0.18 = 1 peso
  April 1, 2015 0.19 = 1
  June 1, 2015 0.20 = 1
  December 31,
2015
0.22 = 1

5.

Assume that the peso is the subsidiary’s functional currency.
What balances does a consolidated balance sheet report as of
December 31, 2015?

6.

Assume that the U.S. dollar is the subsidiary’s functional
currency. What balances does a consolidated balance sheet report as
of December 31, 2015?

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