Question 1

Where is the disposition of a remeasurement gain or loss reported in the parent company's financial statements?

Accepted Answer

A)  Net income/loss in the income statement. 
B)  Cumulative translation adjustment as a deferred asset. 
C)  Cumulative translation adjustment as a deferred liability. 
D)  Other comprehensive income. 
E)  Retained earnings. 
A)  Net income/loss in the income statement. 
B)  Cumulative translation adjustment as a deferred asset. 
C)  Cumulative translation adjustment as a deferred liability. 
D)  Other comprehensive income. 
E)  Retained earnings.

Question 2

On January 1, 2013, Veldon Co., a U.S. corporation with the U.S. dollar as its functional currency, established Malont Co. as a subsidiary. Malont is located in the country of Sorania, and its functional currency is the stickle (§). Malont engaged in the following transactions during 2013:   
Required:
Calculate the translation adjustment for Malont. (Round your answers to the nearest whole dollar.)

Accepted Answer

The answer of On January 1, 2013, Veldon Co., a...

Question 3

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

Question 4

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 5

Certain balance sheet accounts of a foreign subsidiary of Parker Company at December 31, 2013, have been restated into U.S. dollars as follows:   Assuming the functional currency of the subsidiary is the local currency, what total should be included in Parker's consolidated balance sheet at December 31, 2013, 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 6

Sinkal Co. was formed on January 1, 2013 as a wholly owned foreign subsidiary of a U.S. corporation. Sinkal's functional currency was the stickle (§). The following transactions and events occurred during 2013:   What was the amount of the translation adjustment for 2013?

Accepted Answer

A)  $52,000 decrease in relative value of net assets. 
B)  $60,800 decrease in relative value of net assets. 
C)  $61,200 decrease in relative value of net assets. 
D)  $466,400 increase in relative value of net assets. 
E)  $26,000 increase in relative value of net assets. 
A)  $52,000 decrease in relative value of net assets. 
B)  $60,800 decrease in relative value of net assets. 
C)  $61,200 decrease in relative value of net assets. 
D)  $466,400 increase in relative value of net assets. 
E)  $26,000 increase in relative value of net assets.

Question 7

Quadros Inc., a Portuguese firm was acquired by a U.S. company on January 1, 2012. Selected account balances are available for the year ended December 31, 2013, and are stated in Euro, the local currency.   Assume the functional currency is the U.S. Dollar; compute the U.S. income statement amount for depreciation expense for 2013.

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

Quadros Inc., a Portuguese firm was acquired by a U.S. company on January 1, 2012. Selected account balances are available for the year ended December 31, 2013, and are stated in Euro, the local currency.   Assume the functional currency is the Euro; compute the U.S. income statement amount for depreciation expense for 2013.

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 9

Esposito is an Italian subsidiary of a U.S. company.
Esposito's ending inventory is valued at the average cost for the last quarter of the year.
The following account balances are available for Esposito for 2013:  
Compute the cost of goods sold for 2013 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 10

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 11

Ginvold Co. began operating a subsidiary in a foreign country on January 1, 2013 by acquiring all of the common stock for §50,000 Stickles, the local currency. This subsidiary immediately borrowed §120,000 on a five-year note with ten percent interest payable annually beginning on January 1, 2014. A building was then purchased for §170,000 on January 1, 2013. This property had a ten-year anticipated life and no salvage value and was to be depreciated using the straight-line method. The building was immediately rented for three years to a group of local doctors for §6,000 per month. By year-end, payments totaling §60,000 had been received. On October 1, §5,000 were paid for a repair made on that date and it was the only transaction of this kind for the year. A cash dividend of §6,000 was transferred back to Ginvold on December 31, 2013. The functional currency for the subsidiary was the Stickle (§). Currency exchange rates were as follows:   
Prepare a balance sheet for this subsidiary in stickles and then translate the amounts into U.S. dollars.

Accepted Answer

Ginvold Co. Subsidia

Question 12

A foreign subsidiary was acquired on January 1, 2013. Determine the exchange rate used to restate the following accounts at December 31, 2013. Land was purchased on October 1, 2013. Relevant exchange dates follow:
(A) January 1, 2013
(B) October 1, 2013
(C) December 31, 2013
(D) Average, 2013
(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 13

In accounting, the term translation refers to

Accepted Answer

A)  the calculation of gains or losses from hedging transactions. 
B)  the calculation of exchange rate gains or losses on individual transactions in foreign currencies. 
C)  the procedure required to identify a company's functional currency. 
D)  the calculation of gains or losses from all transactions for the year. 
E)  a procedure to prepare a foreign subsidiary's financial statements for consolidation. 
A)  the calculation of gains or losses from hedging transactions. 
B)  the calculation of exchange rate gains or losses on individual transactions in foreign currencies. 
C)  the procedure required to identify a company's functional currency. 
D)  the calculation of gains or losses from all transactions for the year. 
E)  a procedure to prepare a foreign subsidiary's financial statements for consolidation.

Question 14

Darron Co. was formed on January 1, 2013 as a wholly owned foreign subsidiary of a U.S. corporation. Darron's functional currency was the stickle (§). The following transactions and events occurred during 2013:   What was the amount of the translation adjustment for 2013?

Accepted Answer

A)  $52,000 decrease in relative value of net assets. 
B)  $60,800 decrease in relative value of net assets. 
C)  $61,200 decrease in relative value of net assets. 
D)  $466,400 increase in relative value of net assets. 
E)  $26,000 increase in relative value of net assets. 
A)  $52,000 decrease in relative value of net assets. 
B)  $60,800 decrease in relative value of net assets. 
C)  $61,200 decrease in relative value of net assets. 
D)  $466,400 increase in relative value of net assets. 
E)  $26,000 increase in relative value of net assets.

Question 15

A foreign subsidiary uses the first-in first-out inventory method. The following inventory balances are given at December 31, 2013 in local currency units (LCU):   Compute the December 31, 2013, inventory balance using the current rate method.

Accepted Answer

A)  $454,400. 
B)  $457,600. 
C)  $596,400. 
D)  $568,000. 
E)  $426,000. 
A)  $454,400. 
B)  $457,600. 
C)  $596,400. 
D)  $568,000. 
E)  $426,000.

Question 16

Esposito is an Italian subsidiary of a U.S. company.
Esposito's ending inventory is valued at the average cost for the last quarter of the year.
The following account balances are available for Esposito for 2013:  
Compute ending inventory for 2013 under the temporal method.

Accepted Answer

A)  $13,950. 
B)  $14,100. 
C)  $14,400. 
D)  $14,850. 
E)  $15,150. 
A)  $13,950. 
B)  $14,100. 
C)  $14,400. 
D)  $14,850. 
E)  $15,150.

Question 17

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 18

Certain balance sheet accounts of a foreign subsidiary of the Tulip Co. had been stated in U.S. dollars as follows:   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 19

Ginvold Co. began operating a subsidiary in a foreign country on January 1, 2013 by acquiring all of the common stock for §50,000 Stickles, the local currency. This subsidiary immediately borrowed §120,000 on a five-year note with ten percent interest payable annually beginning on January 1, 2014. A building was then purchased for §170,000 on January 1, 2013. This property had a ten-year anticipated life and no salvage value and was to be depreciated using the straight-line method. The building was immediately rented for three years to a group of local doctors for §6,000 per month. By year-end, payments totaling §60,000 had been received. On October 1, §5,000 were paid for a repair made on that date and it was the only transaction of this kind for the year. A cash dividend of §6,000 was transferred back to Ginvold on December 31, 2013. The functional currency for the subsidiary was the Stickle (§). Currency exchange rates were as follows:   
Prepare a statement of cash flows for this subsidiary in stickles and then translate the amounts into U.S. dollars.

Accepted Answer

Ginvold Co. Subsidia

Question 20

Esposito is an Italian subsidiary of a U.S. company.
Esposito's ending inventory is valued at the average cost for the last quarter of the year.
The following account balances are available for Esposito for 2013:  
Compute ending inventory for 2013 under the current rate method.

Accepted Answer

A)  $13,950. 
B)  $14,100. 
C)  $14,400. 
D)  $14,850. 
E)  $15,150. 
A)  $13,950. 
B)  $14,100. 
C)  $14,400. 
D)  $14,850. 
E)  $15,150.

Where is the disposition of a remeasurement gain or loss reported in the parent company's financial statements?

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

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

Sinkal Co. was formed on January 1, 2013 as a wholly owned foreign subsidiary of a U.S. corporation. Sinkal's functional currency was the stickle (§). The following transactions and events occurred during 2013: What was the amount of the translation adjustment for 2013?

Esposito is an Italian subsidiary of a U.S. company. Esposito's ending inventory is valued at the average cost for the last quarter of the year. The following account balances are available for Esposito for 2013: Compute the cost of goods sold for 2013 in U.S. dollars using the current rate method.

The translation adjustment from translating a foreign subsidiary's financial statements should be shown as

In accounting, the term translation refers to

Darron Co. was formed on January 1, 2013 as a wholly owned foreign subsidiary of a U.S. corporation. Darron's functional currency was the stickle (§). The following transactions and events occurred during 2013: What was the amount of the translation adjustment for 2013?

A foreign subsidiary uses the first-in first-out inventory method. The following inventory balances are given at December 31, 2013 in local currency units (LCU): Compute the December 31, 2013, inventory balance using the current rate method.

Esposito is an Italian subsidiary of a U.S. company. Esposito's ending inventory is valued at the average cost for the last quarter of the year. The following account balances are available for Esposito for 2013: Compute ending inventory for 2013 under the temporal method.

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

Certain balance sheet accounts of a foreign subsidiary of the Tulip Co. had been stated in U.S. dollars as follows: 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?

Esposito is an Italian subsidiary of a U.S. company. Esposito's ending inventory is valued at the average cost for the last quarter of the year. The following account balances are available for Esposito for 2013: Compute ending inventory for 2013 under the current rate method.

The Equity Method of Accounting for Investments

Consolidation of Financial Information

Consolidations - Subsequent to the Date of Acquisition

Consolidated Financial Statements and Outside Ownership

Consolidated Financial Statements Intra-Entity Asset Transactions

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

Consolidated Financial Statements - Ownership Patterns and Income Taxes

Segment and Interim Reporting

Foreign Currency Transactions and Hedging Foreign Exchange Risk

Worldwide Accounting Diversity and International Accounting Standards

Financial Reporting and the Securities and Exchange Commission

Accounting for Legal Reorganizations and Liquidations

Partnerships: Formation and Operation

Partnerships: Termination and Liquidation

Accounting for State and Local Governments

Accounting for State and Local Governments

Accounting and Reporting for Private Not-For-Profit Organizations

Accounting for Estates and Trusts

Filters

Exam 10: Translation of Foreign Currency Financial Statements

Where is the disposition of a remeasurement gain or loss reported in the parent company's financial statements?

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

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

Sinkal Co. was formed on January 1, 2013 as a wholly owned foreign subsidiary of a U.S. corporation. Sinkal's functional currency was the stickle (§). The following transactions and events occurred during 2013: What was the amount of the translation adjustment for 2013?

Esposito is an Italian subsidiary of a U.S. company. Esposito's ending inventory is valued at the average cost for the last quarter of the year. The following account balances are available for Esposito for 2013: Compute the cost of goods sold for 2013 in U.S. dollars using the current rate method.

The translation adjustment from translating a foreign subsidiary's financial statements should be shown as

In accounting, the term translation refers to

Darron Co. was formed on January 1, 2013 as a wholly owned foreign subsidiary of a U.S. corporation. Darron's functional currency was the stickle (§). The following transactions and events occurred during 2013: What was the amount of the translation adjustment for 2013?

A foreign subsidiary uses the first-in first-out inventory method. The following inventory balances are given at December 31, 2013 in local currency units (LCU): Compute the December 31, 2013, inventory balance using the current rate method.

Esposito is an Italian subsidiary of a U.S. company. Esposito's ending inventory is valued at the average cost for the last quarter of the year. The following account balances are available for Esposito for 2013: Compute ending inventory for 2013 under the temporal method.

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

Certain balance sheet accounts of a foreign subsidiary of the Tulip Co. had been stated in U.S. dollars as follows: 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?

Esposito is an Italian subsidiary of a U.S. company. Esposito's ending inventory is valued at the average cost for the last quarter of the year. The following account balances are available for Esposito for 2013: Compute ending inventory for 2013 under the current rate method.

The Equity Method of Accounting for Investments

Consolidation of Financial Information

Consolidations - Subsequent to the Date of Acquisition

Consolidated Financial Statements and Outside Ownership

Consolidated Financial Statements Intra-Entity Asset Transactions

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

Consolidated Financial Statements - Ownership Patterns and Income Taxes

Segment and Interim Reporting

Foreign Currency Transactions and Hedging Foreign Exchange Risk

Worldwide Accounting Diversity and International Accounting Standards

Financial Reporting and the Securities and Exchange Commission

Accounting for Legal Reorganizations and Liquidations

Partnerships: Formation and Operation

Partnerships: Termination and Liquidation

Accounting for State and Local Governments

Accounting for State and Local Governments

Accounting and Reporting for Private Not-For-Profit Organizations

Accounting for Estates and Trusts

Filters