Exam 22: Accounting in a Global Market

Under international accounting standards,the derecognition of receivables requires that

Hosgood Distributing Inc.converts its foreign subsidiary financial statements using the translation process.Their German subsidiary reported the following for 2014: revenues and expenses of 9,050,000 and 6,400,000 marks,respectively,earned or incurred evenly throughout the year,dividends of 2,000,000 marks were paid during the year.The following exchange rates are available: Translated net income for 2014 is

Transit Importing Company.converts its foreign subsidiary financial statements using the translation process.The company's French subsidiary reported the following for 2014: revenues and expenses of 10,500,000 and 6,505,000 francs,respectively,earned or incurred evenly throughout the year,dividends of 500,000 francs were paid during the year.The following exchange rates are available: Translated net income for 2014 is

Which of the following is NOT a long-term,joint FASB-IASB project?

Under international accounting standards,revenue is recognized

Ginza Enterprises,a subsidiary of Universal Enterprises based in Dallas,reported the following information at the end of its first year of operations (all in yen): assets--110,000,000; expenses--41,000,000; liabilities--97,500,000; capital stock--5,500,000; revenues--48,000,000.Relevant exchange rates are as follows: As a result of the translation process,what amount is recorded on the financial statements as the translation adjustment?

Which of the following statements is correct?

The following financial information is available for Simmer Company,a hypothetical non-U.S.firm with shares listed on a U.S.stock exchange: If Simmer were following U.S.GAAP,development costs would be expensed when incurred. According to U.S.GAAP,the possible obligation for severance benefits would not be recognized until it had become probable. Prepare a reconciliation of Simmer's reported stockholders' equity and net income to the amounts of these items under U.S.GAAP.

Which of the following is not correct regarding the translation of a foreign entity's accounts?

Monty Enterprises,a subsidiary of Kerry Company based in Delaware,reported the following information at the end of its first year of operations (all in British pounds): assets--483,000; expenses--360,000; liabilities--105,000; capital stock--90,000,revenues--648,000.Relevant exchange rates are as follows: As a result of the translation process,what amount is recorded on the financial statements as the translation adjustment?

Which of the following is the least likely means a company might choose to meet the needs of international investors?

Corrington Metalworks,Inc.,purchased Scotia Metal Products,a Scotia company,on January 4,2014.On the date of purchase,the exchange rate for 1 Scotia dollar was U.S.$0.79.Scotia Metal Products balance sheet on the date of purchase is shown below: Required: Prepare a translated balance sheet as of January 4,2014.

Which of the following is NOT a short-term convergence topic that the FASB must address in order to eliminate the reconciliation of accounts prepared under different sets of standards of different countries?

Under international accounting standards regarding depreciation,an entity

Hibachi,Inc.,purchased Wasabi Manufacturing Company,a Japanese company,on January 4,2014.On the date of purchase,the exchange rate for 1 Japanese yen was U.S.$0.0085.The balance sheet for Wasabi Manufacturing Co.,on the date of purchase is shown below: Wasabi Manufacturing Co. Balance Sheet January 4,2014 (in Japanese yen) Required: Prepare a translated balance sheet as of January 4,2014.

Which of the following statements is true regarding equity reserves?

Under international accounting standards,which of the following methods of inventory costing is not acceptable?

Under international accounting standards,cash paid for interest (associated with interest expense)can be shown on the statement of cash flows as an

The following financial information is for Milo Company,a non-U.S.firm with shares listed on a U.S.stock exchange: If Milo Company were following U.S.GAAP,the minority interest would have been classified as a liability instead of as part of stockholders' equity.In addition,minority interest income of $4,000 for the year would have been excluded from the computation of net income.Under U.S.GAAP the investment securities would have been classified as trading securities and the interest on financing of self-constructed assets would have been capitalized rather than expensed. Prepare reconciliations of Milo's reported stockholders' equity and net income to U.S.GAAP.

The proper analysis of foreign operations by financial statement users requires that financial statements of the foreign operations be expressed in a common currency.For a U.S.company with a French subsidiary,this means converting the subsidiary's financial statements from francs to U.S.dollars. One of the major issues in translating the financial statements of a foreign branch,division,or subsidiary is determining the functional currency of the foreign entity.The term "functional currency" has been defined by the Financial Accounting Standards Boards (FASB)as the currency of the primary economic environment in which the entity operates; normally,the currency of the environment in which the entity primarily generates and expends cash.Although the definition may seem relatively straightforward,the Financial Accounting Standards Board found it necessary to list various factors to guide management in determining the functional currency. Required: Identify the factors FASB identified that might be helpful in making the functional currency decision.