Question 1

Assume the functional currency is the U.S.Dollar; compute the U.S.income statement amount for depreciation expense for 2018.

Accepted Answer

A)  $8,190. 
B)  $8,370. 
C)  $8,820. 
D)  $9,090. 
E)  $8,550. 
A)  $8,190. 
B)  $8,370. 
C)  $8,820. 
D)  $9,090. 
E)  $8,550.

Question 2

Under the current rate method, property, plant & equipment would be translated at what rate?

Accepted Answer

A)  Beginning of the year rate. 
B)  Average rate. 
C)  Current rate. 
D)  Historical rate. 
E)  Composite amount. 
A)  Beginning of the year rate. 
B)  Average rate. 
C)  Current rate. 
D)  Historical rate. 
E)  Composite amount.

Question 3

If the current rate used to restate these amounts is $.95, what was the average historical rate used to arrive at the total amount for historical rates?

Accepted Answer

A)  $0.9000. 
B)  $1.0000. 
C)  $0.9500. 
D)  $0.9474. 
E)  $1.0556. 
A)  $0.9000. 
B)  $1.0000. 
C)  $0.9500. 
D)  $0.9474. 
E)  $1.0556.

Question 4

When using the current rate method, the translation adjustment from translating a foreign subsidiary's financial statements should be shown as

Accepted Answer

A)  An asset or liability (depending on the balance) in the consolidated balance sheet. 
B)  A revenue or expense (depending on the balance) in the consolidated income statement. 
C)  A component of stockholders' equity in the consolidated balance sheet. 
D)  A component of cash flows from financing activities in the consolidated statement of cash flows. 
E)  An element of the notes which accompany the consolidated financial statements. 
A)  An asset or liability (depending on the balance) in the consolidated balance sheet. 
B)  A revenue or expense (depending on the balance) in the consolidated income statement. 
C)  A component of stockholders' equity in the consolidated balance sheet. 
D)  A component of cash flows from financing activities in the consolidated statement of cash flows. 
E)  An element of the notes which accompany the consolidated financial statements.

Question 5

Assume the functional currency is the Euro; compute the U.S.balance sheet amount for inventory at December 31, 2018.

Accepted Answer

A)  $18,800. 
B)  $19,600. 
C)  $18,000. 
D)  $20,200 
E)  $19,000. 
A)  $18,800. 
B)  $19,600. 
C)  $18,000. 
D)  $20,200 
E)  $19,000.

Question 6

When preparing a consolidated statement of cash flows, which of the following statements is false?

Accepted Answer

A)  All operating activity items are translated at an average exchange rate for the period. 
B)  A change in accounts receivable is translated using the current rate. 
C)  A change in long-term debt is translated using the historical rate at the date of the change. 
D)  Dividends paid are translated using the historical rate at the date of the payment. 
E)  All items follow translation rates used for the balance sheet and the income statement. 
A)  All operating activity items are translated at an average exchange rate for the period. 
B)  A change in accounts receivable is translated using the current rate. 
C)  A change in long-term debt is translated using the historical rate at the date of the change. 
D)  Dividends paid are translated using the historical rate at the date of the payment. 
E)  All items follow translation rates used for the balance sheet and the income statement.

Question 7

Assume the functional currency is the U.S.Dollar; compute the U.S.statement of retained earnings amount for dividends for 2018.

Accepted Answer

A)  $19,000. 
B)  $20,200. 
C)  $18,600. 
D)  $19,400. 
E)  $19,600. 
A)  $19,000. 
B)  $20,200. 
C)  $18,600. 
D)  $19,400. 
E)  $19,600.

Question 8

Under the current rate method, retained earnings would be translated at what rate?

Accepted Answer

A)  Beginning of the year rate. 
B)  Average rate. 
C)  Current rate. 
D)  Historical rate. 
E)  Composite amount. 
A)  Beginning of the year rate. 
B)  Average rate. 
C)  Current rate. 
D)  Historical rate. 
E)  Composite amount.

Question 9

How can a parent corporation determine the functional currency for a foreign subsidiary that conducts business in more than one country?

Accepted Answer

If the foreign subsidiary has distinct a

Question 10

Under the current rate method, inventory at net realizable value would be translated for the balance sheet at what rate?

Accepted Answer

A)  Beginning of the year rate. 
B)  Average rate. 
C)  Current rate. 
D)  Historical rate. 
E)  Composite amount. 
A)  Beginning of the year rate. 
B)  Average rate. 
C)  Current rate. 
D)  Historical rate. 
E)  Composite amount.

Question 11

Under the current rate method, which accounts are translated using current exchange rates?

Accepted Answer

A)  All revenues and expenses. 
B)  All assets and liabilities. 
C)  Cash, receivables, and most liabilities. 
D)  All current assets and deferred income. 
E)  All stockholders' equity. 
A)  All revenues and expenses. 
B)  All assets and liabilities. 
C)  Cash, receivables, and most liabilities. 
D)  All current assets and deferred income. 
E)  All stockholders' equity.

Question 12

The financial statements for Perez are remeasured by its U.S.parent.What amount of gain or loss would be reported in its translated income statement?

Accepted Answer

A)  $1,530. 
B)  $1,575. 
C)  $1,590. 
D)  $1,090. 
E)  $1,650. 
A)  $1,530. 
B)  $1,575. 
C)  $1,590. 
D)  $1,090. 
E)  $1,650.

Question 13

Which method of translating a foreign subsidiary's financial statements is correct if it is assumed that the parent's net investment is exposed to foreign exchange risk?

Accepted Answer

A)  Historical rate method. 
B)  Working capital method. 
C)  Current rate method. 
D)  Remeasurement. 
E)  Temporal method. 
A)  Historical rate method. 
B)  Working capital method. 
C)  Current rate method. 
D)  Remeasurement. 
E)  Temporal method.

Question 14

Compute the cost of goods sold for 2018 in U.S.dollars using the current rate method.

Accepted Answer

A)  $376,550. 
B)  $387,750. 
C)  $388,800. 
D)  $400,950. 
E)  $409,050. 
A)  $376,550. 
B)  $387,750. 
C)  $388,800. 
D)  $400,950. 
E)  $409,050.

Question 15

Prepare a balance sheet for this subsidiary in stickles and then translate the amounts into U.S.dollars.

Accepted Answer

Ginvold Co. Subsidia

Question 16

A U.S.company's foreign subsidiary had the following amounts in stickles (§) in 2018:   The average exchange rate during 2018 was §1 = $.96.The beginning inventory was acquired when the exchange rate was §1 = $1.20.The ending inventory was acquired when the exchange rate was §1 = $.90.The exchange rate at December 31, 2018 was §1 = $.84.Assuming that the foreign country had a highly inflationary economy, at what amount should the foreign subsidiary's cost of goods sold have been reflected in the 2018 U.S.dollar income statement?

Accepted Answer

A)  $11,253,600. 
B)  $11,577,600. 
C)  $11,649,600. 
D)  $11,613,600. 
E)  $11,523,600. 
A)  $11,253,600. 
B)  $11,577,600. 
C)  $11,649,600. 
D)  $11,613,600. 
E)  $11,523,600.

Question 17

In translating a foreign subsidiary's financial statements, which exchange rate does the current method require for the subsidiary's assets and liabilities?

Accepted Answer

A)  The exchange rate in effect when each asset or liability was acquired. 
B)  The average exchange rate for the current year. 
C)  A calculated exchange rate based on market value. 
D)  The exchange rate in effect as of the balance sheet date. 
E)  The exchange rate in effect at the start of the current year. 
A)  The exchange rate in effect when each asset or liability was acquired. 
B)  The average exchange rate for the current year. 
C)  A calculated exchange rate based on market value. 
D)  The exchange rate in effect as of the balance sheet date. 
E)  The exchange rate in effect at the start of the current year.

Question 18

Assume the functional currency is the U.S.Dollar; compute the U.S.balance sheet amount for equipment for 2018.

Accepted Answer

A)  $81,900. 
B)  $90,900. 
C)  $83,700. 
D)  $88,200. 
E)  $85,500. 
A)  $81,900. 
B)  $90,900. 
C)  $83,700. 
D)  $88,200. 
E)  $85,500.

Question 19

Perkle Co.owned a subsidiary in Belgium; the subsidiary's functional currency was the Belgian franc.During 2018, Perkle engaged in hedging transactions to offset part of the subsidiary's net asset position.How should the effects of exchange rate fluctuations on the currency hedge be accounted for?

Accepted Answer

Any effect on the contract res

Question 20

Kennedy's share of Hastie's net income for 2018 would be

Accepted Answer

A)  $18,000. 
B)  $15,000. 
C)  $18,200. 
D)  $16,000. 
E)  $18,500. 
A)  $18,000. 
B)  $15,000. 
C)  $18,200. 
D)  $16,000. 
E)  $18,500.

Exam 10: Translation of Foreign Currency Financial Statements

Assume the functional currency is the U.S.Dollar; compute the U.S.income statement amount for depreciation expense for 2018.

Under the current rate method, property, plant & equipment would be translated at what rate?

If the current rate used to restate these amounts is $.95, what was the average historical rate used to arrive at the total amount for historical rates?

When using the current rate method, the translation adjustment from translating a foreign subsidiary's financial statements should be shown as

Assume the functional currency is the Euro; compute the U.S.balance sheet amount for inventory at December 31, 2018.

When preparing a consolidated statement of cash flows, which of the following statements is false?

Assume the functional currency is the U.S.Dollar; compute the U.S.statement of retained earnings amount for dividends for 2018.

Under the current rate method, retained earnings would be translated at what rate?

How can a parent corporation determine the functional currency for a foreign subsidiary that conducts business in more than one country?

Under the current rate method, inventory at net realizable value would be translated for the balance sheet at what rate?

Under the current rate method, which accounts are translated using current exchange rates?

The financial statements for Perez are remeasured by its U.S.parent.What amount of gain or loss would be reported in its translated income statement?

Which method of translating a foreign subsidiary's financial statements is correct if it is assumed that the parent's net investment is exposed to foreign exchange risk?

Compute the cost of goods sold for 2018 in U.S.dollars using the current rate method.

Prepare a balance sheet for this subsidiary in stickles and then translate the amounts into U.S.dollars.

In translating a foreign subsidiary's financial statements, which exchange rate does the current method require for the subsidiary's assets and liabilities?

Assume the functional currency is the U.S.Dollar; compute the U.S.balance sheet amount for equipment for 2018.

Perkle Co.owned a subsidiary in Belgium; the subsidiary's functional currency was the Belgian franc.During 2018, Perkle engaged in hedging transactions to offset part of the subsidiary's net asset position.How should the effects of exchange rate fluctuations on the currency hedge be accounted for?

Kennedy's share of Hastie's net income for 2018 would be

The Equity Method of Accounting for Investments

A: the Equity Method of Accounting for Investments

Consolidation of Financial Information

A: Consolidation of Financial Information

Consolidations - Subsequent to the Date of Acquisition

A: Consolidations - Subsequent to the Date of Acquisition

Consolidated Financial Statements and Outside Ownership

A: Consolidated Financial Statements and Outside Ownership

Consolidated Financial Statements Intra-Entity Asset Transactions

A: Consolidated Financial Statements Intra-Entity Asset Transactions

Variable Interest Entities, Intra-Entity Debt, Consolidated Cash Flows, and Other Issues

A: Variable Interest Entities, Intra-Entity Debt, Consolidated Cash Flows, and Other Issues

Consolidated Financial Statements - Ownership Patterns and Income Taxes

A: Consolidated Financial Statements - Ownership Patterns and Income Taxes

Segment and Interim Reporting

A: Segment and Interim Reporting

Foreign Currency Transactions and Hedging Foreign Exchange Risk

A: Foreign Currency Transactions and Hedging Foreign Exchange Risk

A: Translation of Foreign Currency Financial Statements

Worldwide Accounting Diversity and International Accounting Standards

A: Worldwide Accounting Diversity and International Accounting Standards

Financial Reporting and the Securities and Exchange Commission

A: Financial Reporting and the Securities and Exchange Commission

Accounting for Legal Reorganizations and Liquidations

A: Accounting for Legal Reorganizations and Liquidations

Partnerships: Formation and Operation

A: Partnerships: Formation and Operation

Partnerships: Termination and Liquidation

A: Partnerships: Termination and Liquidation

Accounting for State and Local Governments, Part I

A: Accounting for State and Local Governments, Part I

Accounting for State and Local Governments, Part II

A: Accounting for State and Local Governments, Part II

Accounting for Not-For-Profit Entities

A: Accounting for Not-For-Profit Entities

Accounting for Estates and Trusts

A: Accounting for Estates and Trusts

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