Dada Enterprises a Kuwaiti Subsidiary operating in South Korea, accounts for its inventories on a FIFO basis. The company translates its inventories to Kuwaiti dinars at the current rate. Year-end inventories are recorded at 10,920,000 won. During the year, the replacement cost of inventories increases by 20 percent. Inflation and exchange rate information are as follows:
January 1: Specific price index =100; 1KWD = KRW2,880
December 31: Specific price index = 120; 1KWD = KRW3,744
Required:
Based on this information:
Calculate the dinar amount current-cost adjustment for cost of sales. Explain your answers and any assumptions you may have made.
(Hint: Compute your Cost of Goods Sold using an adjusted cost for inflation then translate)
