Question 1

Under the current rate method, inventory at market 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 2

Under the current rate method, how would cost of goods sold be translated?

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

A net liability 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 4

Certain balance sheet accounts of a foreign subsidiary of Parker Company at December 31, 2013, have been restated into U.S. dollars as follows:   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 5

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 6

What exchange rate should be used to translate (a) revenues and expenses that occur throughout the year and (b) a gain or loss that occurs on a specific day?

Accepted Answer

Revenues and expenses occurring througho

Question 7

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 exchange rate should have been used in translating Darron's revenues and expenses for 2013?

Accepted Answer

A)  $1 = §.48. 
B)  $1 = §.44. 
C)  $1 = §.46. 
D)  $1 = §.42. 
E)  $1 = §.45. 
A)  $1 = §.48. 
B)  $1 = §.44. 
C)  $1 = §.46. 
D)  $1 = §.42. 
E)  $1 = §.45.

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. balance sheet amount for accumulated depreciation for 2013.

Accepted Answer

A)  $40,950. 
B)  $41,850. 
C)  $45,450. 
D)  $42,750. 
E)  $44,100. 
A)  $40,950. 
B)  $41,850. 
C)  $45,450. 
D)  $42,750. 
E)  $44,100.

Question 9

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 sales for 2013.

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

Perez Company, a Mexican subsidiary of a U.S. company, sold equipment costing 200,000 pesos with accumulated depreciation of 75,000 pesos for 140,000 pesos on March 1, 2013. The equipment was purchased on January 1, 2012. Relevant exchange rates for the peso are as follows:   The financial statements for Perez are translated 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 11

Dilty Corp. owned a subsidiary in France. Dilty concluded that the subsidiary's functional currency was the U.S. dollar.
What must Dilty do to ready the subsidiary's financial statements for consolidation?

Accepted Answer

A)  first translate them, then remeasure them. 
B)  first remeasure them, then translate them. 
C)  state all of the subsidiary's accounts in U.S. dollars using the exchange rate in effect at the balance sheet date. 
D)  translate them. 
E)  remeasure them. 
A)  first translate them, then remeasure them. 
B)  first remeasure them, then translate them. 
C)  state all of the subsidiary's accounts in U.S. dollars using the exchange rate in effect at the balance sheet date. 
D)  translate them. 
E)  remeasure them.

Question 12

A highly inflationary economy is defined as

Accepted Answer

A)  Cumulative 5-year inflation in excess of 100%. 
B)  Cumulative 3-year inflation in excess of 100%. 
C)  Cumulative 5-year inflation in excess of 90%. 
D)  Cumulative 3-year inflation in excess of 90%. 
E)  Any country designated as a company operating in a third-world economy. 
A)  Cumulative 5-year inflation in excess of 100%. 
B)  Cumulative 3-year inflation in excess of 100%. 
C)  Cumulative 5-year inflation in excess of 90%. 
D)  Cumulative 3-year inflation in excess of 90%. 
E)  Any country designated as a company operating in a third-world economy.

Question 13

Kennedy Company acquired all of the outstanding common stock of Hastie Company of Canada for U.S. $350,000 on January 1, 2013, when the exchange rate for the Canadian dollar (CAD) was U.S. $.70. The fair value of the net assets of Hastie was equal to their book value of CAD 450,000 on the date of acquisition. Any acquisition consideration excess over fair value was attributed to an unrecorded patent with a remaining life of five years. The functional currency of Hastie is the Canadian dollar.
For the year ended December 31, 2013, Hastie's trial balance net income was translated at U.S. $25,000. The average exchange rate for the Canadian dollar during 2013 was U.S. $.68, and the 2013 year-end exchange rate was U.S. $.65.
Compute the amount of the patent reported in the consolidated balance sheet at December 31, 2013.

Accepted Answer

A)  $28,200. 
B)  $25,700. 
C)  $35,000. 
D)  $27,200. 
E)  $26,000. 
A)  $28,200. 
B)  $25,700. 
C)  $35,000. 
D)  $27,200. 
E)  $26,000.

Question 14

Under the temporal method, common stock 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

Boerkian Co. started 2013 with two assets: Cash of §26,000 (Stickles) and Land that originally cost §72,000 when acquired on April 4, 2010. On May 1, 2013, the company rendered services to a customer for §36,000, an amount immediately paid in cash. On October 1, 2013, the company incurred an operating expense of §22,000 that was immediately paid. No other transactions occurred during the year so an average exchange rate is not necessary. Currency exchange rates were as follows:   
Assume Boerkian was a foreign subsidiary of a U.S. multinational company and the U.S. dollar was the functional currency of the subsidiary. Prepare a schedule of changes in the net monetary assets of Boerkian for the year 2013 and properly label the resulting gain or loss.

Accepted Answer

The answer of Boerkian Co. started 2013 with two assets:...

Question 16

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 17

Boerkian Co. started 2013 with two assets: Cash of §26,000 (Stickles) and Land that originally cost §72,000 when acquired on April 4, 2010. On May 1, 2013, the company rendered services to a customer for §36,000, an amount immediately paid in cash. On October 1, 2013, the company incurred an operating expense of §22,000 that was immediately paid. No other transactions occurred during the year so an average exchange rate is not necessary. Currency exchange rates were as follows:   
Assume that Boerkian was a foreign subsidiary of a U.S. multinational company and the stickle (§) was the functional currency of the subsidiary. Calculate the translation adjustment for this subsidiary for 2013 and state whether this is a positive or a negative adjustment.

Accepted Answer

The answer of Boerkian Co. started 2013 with two assets:...

Question 18

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 19

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. balance sheet amount for inventory, at cost, for 2013.

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 20

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.

Under the current rate method, inventory at market would be translated at what rate?

Under the current rate method, how would cost of goods sold be translated?

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

Certain balance sheet accounts of a foreign subsidiary of Parker Company at December 31, 2013, have been restated into U.S. dollars as follows: 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 preparing a consolidation worksheet for a parent and its foreign subsidiary accounted for under the equity method, which of the following statements is false?

What exchange rate should be used to translate (a) revenues and expenses that occur throughout the year and (b) a gain or loss that occurs on a specific day?

Dilty Corp. owned a subsidiary in France. Dilty concluded that the subsidiary's functional currency was the U.S. dollar. What must Dilty do to ready the subsidiary's financial statements for consolidation?

A highly inflationary economy is defined as

Under the temporal method, common stock 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?

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

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

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

Under the current rate method, inventory at market would be translated at what rate?

Under the current rate method, how would cost of goods sold be translated?

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

Certain balance sheet accounts of a foreign subsidiary of Parker Company at December 31, 2013, have been restated into U.S. dollars as follows: 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 preparing a consolidation worksheet for a parent and its foreign subsidiary accounted for under the equity method, which of the following statements is false?

What exchange rate should be used to translate (a) revenues and expenses that occur throughout the year and (b) a gain or loss that occurs on a specific day?

Dilty Corp. owned a subsidiary in France. Dilty concluded that the subsidiary's functional currency was the U.S. dollar. What must Dilty do to ready the subsidiary's financial statements for consolidation?

A highly inflationary economy is defined as

Under the temporal method, common stock 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?

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

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

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