Question 1

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

Accepted Answer

A)  $364,000. 
B)  $372,000. 
C)  $380,000. 
D)  $360,000. 
E)  $404,000. 
A)  $364,000. 
B)  $372,000. 
C)  $380,000. 
D)  $360,000. 
E)  $404,000.

Question 2

Assuming the functional currency of the subsidiary is the U.S.dollar, what total should be included in Parker's consolidated balance sheet at December 31, 2018, for the above items?

Accepted Answer

A)  $407,500. 
B)  $418,000. 
C)  $396,000. 
D)  $403,500. 
E)  $398,500. 
A)  $407,500. 
B)  $418,000. 
C)  $396,000. 
D)  $403,500. 
E)  $398,500.

Question 3

Westmore reported sales of £1,500,000 during 2018.What amount (rounded) would have been included for this subsidiary in calculating consolidated sales?

Accepted Answer

A)  $2,415,000. 
B)  $2,400,000. 
C)  $2,385,000. 
D)  $ 943,396. 
E)  $ 931,677. 
A)  $2,415,000. 
B)  $2,400,000. 
C)  $2,385,000. 
D)  $ 943,396. 
E)  $ 931,677.

Question 4

A net asset balance sheet exposure exists and the foreign currency appreciates.Which of the following statements is true?

Accepted Answer

A)  There is no translation adjustment. 
B)  There is a transaction loss. 
C)  There is a transaction gain. 
D)  There is a negative translation adjustment. 
E)  There is a positive translation adjustment. 
A)  There is no translation adjustment. 
B)  There is a transaction loss. 
C)  There is a transaction gain. 
D)  There is a negative translation adjustment. 
E)  There is a positive translation adjustment.

Question 5

Compute the December 31, 2018, inventory balance using the current rate method.

Accepted Answer

A)  $454,400. 
B)  $457,600. 
C)  $596,400. 
D)  $419,000. 
E)  $321,000. 
A)  $454,400. 
B)  $457,600. 
C)  $596,400. 
D)  $419,000. 
E)  $321,000.

Question 6

Calculate the U.S.dollar amount allocated to the patent at January 1, 2018.

Accepted Answer

A)  $50,000. 
B)  $35,000. 
C)  $34,000. 
D)  $32,500. 
E)  $28,200. 
A)  $50,000. 
B)  $35,000. 
C)  $34,000. 
D)  $32,500. 
E)  $28,200.

Question 7

Assume the functional currency is the Euro; 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 8

Under the temporal method, property, plant & equipment would be remeasured 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

Assume the functional currency is the Euro; compute the U.S.income statement amount for sales for 2018.

Accepted Answer

A)  $364,000. 
B)  $372,000. 
C)  $380,000. 
D)  $360,000. 
E)  $404,000. 
A)  $364,000. 
B)  $372,000. 
C)  $380,000. 
D)  $360,000. 
E)  $404,000.

Question 10

A foreign subsidiary of a U.S.corporation purchased equipment on January 4, 2015.
(A.) How would depreciation expense on the equipment be translated for 2018?
(B.) How would depreciation expense on the equipment be remeasured for 2018?

Accepted Answer

(A.) Depreciation expense would be trans

Question 11

When preparing a consolidation worksheet for a parent and its foreign subsidiary accounted for under the equity method, which of the following statements is false?

Accepted Answer

A)  The cumulative translation adjustment included in the Investment in Subsidiary account is eliminated. 
B)  The excess of fair value over book value since the date of acquisition is revalued for the change in exchange rate. 
C)  The amount of equity income recognized by the parent in the current year is eliminated. 
D)  The allocations of excess of fair value over book value at the date of acquisition are eliminated. 
E)  The subsidiary's stockholders' equity accounts as of the beginning of the year are eliminated. 
A)  The cumulative translation adjustment included in the Investment in Subsidiary account is eliminated. 
B)  The excess of fair value over book value since the date of acquisition is revalued for the change in exchange rate. 
C)  The amount of equity income recognized by the parent in the current year is eliminated. 
D)  The allocations of excess of fair value over book value at the date of acquisition are eliminated. 
E)  The subsidiary's stockholders' equity accounts as of the beginning of the year are eliminated.

Question 12

Which one of the following statements would justify this conclusion?

Accepted Answer

A)  Most of the subsidiary's sales and purchases were with companies in the U.S. 
B)  Dilty's functional currency is the dollar and Dilty is the parent. 
C)  Dilty's other subsidiaries all had the dollar as their functional currency. 
D)  Generally accepted accounting principles require that the subsidiary's functional currency must be the dollar if consolidated financial statements are to be prepared. 
E)  Dilty is located in the U.S. 
A)  Most of the subsidiary's sales and purchases were with companies in the U.S. 
B)  Dilty's functional currency is the dollar and Dilty is the parent. 
C)  Dilty's other subsidiaries all had the dollar as their functional currency. 
D)  Generally accepted accounting principles require that the subsidiary's functional currency must be the dollar if consolidated financial statements are to be prepared. 
E)  Dilty is located in the U.S.

Question 13

What is a company's functional currency?

Accepted Answer

A)  The currency of the primary economic environment in which it operates. 
B)  The currency of the country where it has its headquarters. 
C)  The currency in which it prepares its financial statements. 
D)  The reporting currency of its parent for a subsidiary. 
E)  The currency it chooses to designate as such. 
A)  The currency of the primary economic environment in which it operates. 
B)  The currency of the country where it has its headquarters. 
C)  The currency in which it prepares its financial statements. 
D)  The reporting currency of its parent for a subsidiary. 
E)  The currency it chooses to designate as such.

Question 14

Under the temporal method, retained earnings would be remeasured 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 15

In translating a foreign subsidiary's financial statements, what exchange rate should be used for the subsidiary's revenues and expenses?

Accepted Answer

The historical rate that was in effect w

Question 16

If the U.S.dollar is the functional currency of this subsidiary, what total amount should be included in Tulip's balance sheet in U.S.dollars?

Accepted Answer

A)  $609,000. 
B)  $658,000. 
C)  $602,000. 
D)  $630,000. 
E)  $616,000. 
A)  $609,000. 
B)  $658,000. 
C)  $602,000. 
D)  $630,000. 
E)  $616,000.

Question 17

If a subsidiary is operating in a highly inflationary economy, how are the financial statements to be restated?

Accepted Answer

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

Question 18

Which method is used for remeasuring a foreign subsidiary's financial statements?

Accepted Answer

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

Question 19

A foreign subsidiary was acquired on January 1, 2018.Determine the exchange rate used to restate the following accounts at December 31, 2018.Land was purchased on October 1, 2018.Relevant exchange dates follow:
(A) January 1, 2018
(B) October 1, 2018
(C) December 31, 2018
(D) Average, 2018
(E) Composite, using multiple dates.
Identify the exchange rate used to translate items 1-5 when the functional currency is the foreign currency:
____ 1.Land.
____ 2.Equipment.
____ 3.Bonds payable.
____ 4.Common stock.
____ 5.Retained earnings.
Identify the exchange rate used to remeasure the items 6-10 when the functional currency is the U.S.dollar:
____ 6.Land.
____ 7.Equipment.
____ 8.Bonds payable.
____ 9.Common stock.
____ 10.Retained earnings.

Accepted Answer

(1.) C; (2) C; (3.)

Question 20

A U.S.company's foreign subsidiary had the following amounts in stickles (§), the functional currency, 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.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)  $11,520,000. 
D)  $11,613,600. 
E)  $11,523,600. 
A)  $11,253,600. 
B)  $11,577,600. 
C)  $11,520,000. 
D)  $11,613,600. 
E)  $11,523,600.

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 sales for 2018.

Assuming the functional currency of the subsidiary is the U.S.dollar, what total should be included in Parker's consolidated balance sheet at December 31, 2018, for the above items?

Westmore reported sales of £1,500,000 during 2018.What amount (rounded) would have been included for this subsidiary in calculating consolidated sales?

A net asset balance sheet exposure exists and the foreign currency appreciates.Which of the following statements is true?

Compute the December 31, 2018, inventory balance using the current rate method.

Calculate the U.S.dollar amount allocated to the patent at January 1, 2018.

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

Under the temporal method, property, plant & equipment would be remeasured at what rate?

Assume the functional currency is the Euro; compute the U.S.income statement amount for sales for 2018.

A foreign subsidiary of a U.S.corporation purchased equipment on January 4, 2015. (A.) How would depreciation expense on the equipment be translated for 2018? (B.) How would depreciation expense on the equipment be remeasured for 2018?

When preparing a consolidation worksheet for a parent and its foreign subsidiary accounted for under the equity method, which of the following statements is false?

Which one of the following statements would justify this conclusion?

What is a company's functional currency?

Under the temporal method, retained earnings would be remeasured at what rate?

In translating a foreign subsidiary's financial statements, what exchange rate should be used for the subsidiary's revenues and expenses?

If the U.S.dollar is the functional currency of this subsidiary, what total amount should be included in Tulip's balance sheet in U.S.dollars?

If a subsidiary is operating in a highly inflationary economy, how are the financial statements to be restated?

Which method is used for remeasuring a foreign subsidiary's financial statements?

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

Filters