Reference no: EM131613890

Problem - Placo Ltd., a Scottish subsidiary of Limko, Inc., a U.S. company, showed cost of goods sold on its income statement for the year ended December 31, 2010. Purchases were made evenly throughout the year. Ending inventory was purchased on 12/31.

Inventory, 1/1/10                                 £ 100,000

Purchases                                             900,000

Cost of Goods Available for Sale       1,000,000

Inventory, 12/31/10                               200,000

Cost of Goods Sold                             £ 800,000

Exchange rates/£

December 31, 2010                             $0.522

December 31, 2009                             $0.560

2010 average                                       $0.547

a. What amount should be used to consolidate Placo's cost of goods sold into Limko's income statement under the current rate method?

b. What amount should be used to consolidate Placo's cost of goods sold into Limko's income statement under the temporal method?