Aus Co Ltd has a foreign operation based in Japan.The following information was extracted from the foreign operation's financial statements for the period ended 30 June 2015: \[\begin{array} { | l | r | } \hline & ¥ 000 \\ \hline \text { Machinery (at cost purchased 1 July 2013) } & 85000 \\ \hline \text { Inventory on hand (purchased last quarter 2015) } & 16000 \\ \hline \text { Depreciation expense-machinery } & 8200 \\ \hline \text { Land (purchased 1 July 2013, revalued 1 June 2015) } & 150000 \\ \hline \end{array}\] Exchange rate information is: \[\begin{array} { | l | r | } \hline 1 \text { July } 2013 & ¥ 1.00 = A S 0.0136 \\ \hline \text { Average for year ended } 30 \text { June } 2015 & ¥ 1.00 = A \$ 0.0153 \\ \hline 1 \text { June } 2015 & ¥ 1.00 = A S 0.0146 \\ \hline \text { Last quarter } 2015 & ¥ 1.00 = A \$ 0.0150 \\ \hline 30 \text { June } 2015 & ¥ 1.00 = A \$ 0.0165 \\ \hline \end{array}\] What is the amount at which each item would be translated (rounded to the nearest A$)?

A) \[\begin{array} { | l | r | } \hline & { \text { A\$ } } \\ \hline \text { Machinery } & 1402500 \\ \hline \text { Inventory on hand } & 264000 \\ \hline \text { Depreciation expense-machinery } & 125460 \\ \hline \text { Land } & 2475000 \\ \hline \end{array}\] B) \[\begin{array} { | l | r | } \hline & \text { A\$ } \\ \hline \text { Machinery } & 1156000 \\ \hline \text { Inventory on hand } & 240000 \\ \hline \text { Depreciation expense-machinery } & 111520 \\ \hline \text { Land } & 2190000 \\ \hline \end{array}\] C) \[\begin{array} { | l | r | } \hline & { \text { A\$} } \\ \hline \text { Machinery } & 1402000 \\ \hline \text { Inventory on hand } & 233600 \\ \hline \text { Depreciation expense-machinery } & 111520 \\ \hline \text { Land } & 2040000 \\ \hline \end{array}\] D) \[\begin{array} { | l | r | } \hline & { \text { AS } } \\ \hline \text { Machinery } & 1156000 \\ \hline \text { Inventory on hand } & 264000 \\ \hline \text { Depreciation expense-machinery } & 135300 \\ \hline \text { Land } & 2040000\\ \hline \end{array}\] A) \[\begin{array} { | l | r | } \hline & { \text { A\$ } } \\ \hline \text { Machinery } & 1402500 \\ \hline \text { Inventory on hand } & 264000 \\ \hline \text { Depreciation expense-machinery } & 125460 \\ \hline \text { Land } & 2475000 \\ \hline \end{array}\] B) \[\begin{array} { | l | r | } \hline & \text { A\$ } \\ \hline \text { Machinery } & 1156000 \\ \hline \text { Inventory on hand } & 240000 \\ \hline \text { Depreciation expense-machinery } & 111520 \\ \hline \text { Land } & 2190000 \\ \hline \end{array}\] C) \[\begin{array} { | l | r | } \hline & { \text { A\$} } \\ \hline \text { Machinery } & 1402000 \\ \hline \text { Inventory on hand } & 233600 \\ \hline \text { Depreciation expense-machinery } & 111520 \\ \hline \text { Land } & 2040000 \\ \hline \end{array}\] D) \[\begin{array} { | l | r | } \hline & { \text { AS } } \\ \hline \text { Machinery } & 1156000 \\ \hline \text { Inventory on hand } & 264000 \\ \hline \text { Depreciation expense-machinery } & 135300 \\ \hline \text { Land } & 2040000\\ \hline \end{array}\]

Exam 25: Translating the Financial Statements of Foreign Operations

As prescribed in IAS 21,translation of the financial statements of foreign operations to the presentation currency requires any gains or losses on translation be taken directly to reserves.

(True/False)

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Question 21

In the process of consolidating the translated financial statements of a foreign operation,the elimination entry to record goodwill will be affected by the translation process in what way?

(Multiple Choice)

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Question 22

Outline the approach to be taken when translating the accounts of a foreign subsidiary; that is,the various rates to be used for the various components of the financial statements.

(Essay)

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Question 23

Yarra Manufacturing Plc is a British registered entity that has a branch in Singapore,Kew Plc.The Singapore branch has a foreign operation in China.The foreign operation maintains its accounting records in Chinese yuan.The functional currency of the Chinese operation is Singapore dollar.The presentation currency of Kew Plc is British pound. At reporting date,the translation of the financial statements of the Chinese foreign operation resulted in a loss of S$6500 and the translation of the financial statements of Kew Plc to its presentation currency resulted to a gain of £4500. Which of the following results is consistent with IAS 21 with respect to Kew Plc?

(Multiple Choice)

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Question 24

IAS 21 prescribes alternative methods for the translation of the financial statements of foreign operations.It depends upon whether these operations are integrated or self-sustaining.

(True/False)

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Question 25

As prescribed in IAS 21,when re-measuring financial statements of foreign operations to presentation currency,which of the following identifies all items to be remeasured at historic rates?

(Multiple Choice)

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Question 26

If the exchange rate for US dollars relative to Euros goes from $1 = €2.10 to $1 = €2.20,the Euro has strengthened.

(True/False)

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Question 27

Distributions from retained profits are translated at:

(Multiple Choice)

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Question 28

In the process of consolidating the translated financial statements of a foreign operation,the calculation of minority interests will be affected by the translation process in what way?

(Multiple Choice)

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Question 29

The exchange rate used for the translation of the payment of dividends is the spot rate at the date when the retained earnings or reserves,from which the dividends were drawn,were created.

(True/False)

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Question 30

As prescribed in IAS 21,in translating the financial statements of a foreign operation from functional to presentation currency,the exchange rate to use for inventory is the average rate during the period the inventory was purchased.

(True/False)

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Question 31

Yarra Manufacturing Plc is a British registered entity that has a branch in Singapore,Kew Plc.Kew Plc has a foreign operation in China.The foreign operation maintains its accounting records in Chinese yuan.The functional currency of the Chinese operation is Singapore dollar.The presentation currency of Kew Plc is British pound. At reporting date,the translation of the financial statements of the Chinese foreign operation resulted in a loss of S$6500 and the translation of the financial statements of Kew Plc to its presentation currency resulted to a gain of £4500. Which of the following results is consistent with IAS 21 with respect to Yarra Manufacturing Plc?

(Multiple Choice)

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Question 32

Aus Co Ltd has a foreign operation based in Japan.The following information was extracted from the foreign operation's financial statements for the period ended 30 June 2015: ¥000 Machinery (at cost purchased 1 July 2013) 85000 Inventory on hand (purchased last quarter 2015) 16000 Depreciation expense-machinery 8200 Land (purchased 1 July 2013, revalued 1 June 2015) 150000 Exchange rate information is: 1 July 2013 ¥1.00=AS0.0136 Average for year ended 30 June 2015 ¥1.00=A\ 0.0153 1 June 2015 ¥1.00=AS0.0146 Last quarter 2015 ¥1.00=A\ 0.0150 30 June 2015 ¥1.00=A\ 0.0165 What is the amount at which each item would be translated (rounded to the nearest A$)?

(Multiple Choice)

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Question 33

Showing 21 - 33 of 33

As prescribed in IAS 21,translation of the financial statements of foreign operations to the presentation currency requires any gains or losses on translation be taken directly to reserves.

In the process of consolidating the translated financial statements of a foreign operation,the elimination entry to record goodwill will be affected by the translation process in what way?

Outline the approach to be taken when translating the accounts of a foreign subsidiary; that is,the various rates to be used for the various components of the financial statements.

IAS 21 prescribes alternative methods for the translation of the financial statements of foreign operations.It depends upon whether these operations are integrated or self-sustaining.

As prescribed in IAS 21,when re-measuring financial statements of foreign operations to presentation currency,which of the following identifies all items to be remeasured at historic rates?

If the exchange rate for US dollars relative to Euros goes from $1 = €2.10 to $1 = €2.20,the Euro has strengthened.

Distributions from retained profits are translated at:

In the process of consolidating the translated financial statements of a foreign operation,the calculation of minority interests will be affected by the translation process in what way?

The exchange rate used for the translation of the payment of dividends is the spot rate at the date when the retained earnings or reserves,from which the dividends were drawn,were created.

As prescribed in IAS 21,in translating the financial statements of a foreign operation from functional to presentation currency,the exchange rate to use for inventory is the average rate during the period the inventory was purchased.

An Overview of the International External Reporting Environment

The Conceptual Framework of Accounting and Its Relevance to Financial Reporting

Theories of Financial Accounting

An Overview of Accounting for Assets

Depreciation of Property, Plant and Equipment

Revaluations and Impairment Testing of Non-Current Assets

Inventory

Accounting for Intangibles

An Overview of Accounting for Liabilities

Accounting for Leases

Share Capital, Reserves and Share Options Employee Bonus Schemes

Accounting for Financial Instruments

Revenue Recognition Issues

The Statement of Comprehensive Income and Statement of Changes in Equity

Accounting for Income Taxes

The Statement of Cash Flows

Events Occurring After the Reporting Date

Related-Party Disclosures

Earnings Per Share

Further Consolidation Issues I: Accounting for Intragroup Transactions

Further Consolidation Issues II: Accounting for Non-Controlling Interests

Further Consolidation Issues III: Accounting for Indirect Ownership Interest

Accounting for Foreign Currency Transactions

Accounting for Corporate Social Responsibility

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