Question 1

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 liabilities. 
E)  all noncurrent assets and liabilities. 
A)  all revenues and expenses. 
B)  all assets and liabilities. 
C)  cash, receivables, and most liabilities. 
D)  all current assets and liabilities. 
E)  all noncurrent assets and liabilities.

Question 2

Sinkal Co. was formed on January 1, 2011 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 2011:   What was the amount of the translation adjustment for 2011?

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 3

Quadros Inc., a Portuguese firm was acquired by a U.S. company on January 1, 2010. Selected account balances are available for the year ended December 31, 2011, and are stated in euro, the local currency.   Relevant exchange rates for 1 euro are given below:   Assume the functional currency is the U.S. dollar, compute the U.S. statement of retained earnings amount for dividends for 2011.

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 4

Quadros Inc., a Portuguese firm was acquired by a U.S. company on January 1, 2010. Selected account balances are available for the year ended December 31, 2011, and are stated in euro, the local currency.   Relevant exchange rates for 1 euro are given below:   Assume the functional currency is the U.S. dollar, compute the U.S. balance sheet amount for inventory, at cost, for 2011.

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 5

On January 1, 2011, 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 2011:   Required:
Calculate the translation adjustment for Malont. (Round your answers to the nearest whole dollar.)

Accepted Answer

The answer of On January 1, 2011, Veldon Co., a...

Question 6

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 7

Darron Co. was formed on January 1, 2011 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 2011:   What exchange rate should have been used in translating Darron's revenues and expenses for 2011?

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

When preparing a consolidating 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 9

A foreign subsidiary was acquired on January 1, 2011. Determine the exchange rate used to restate the following accounts at December 31, 2011. Land was purchased on October 1, 2011. Relevant exchange dates follow:
(A) January 1, 2011
(B) October 1, 2011
(C) December 31, 2011
(D) Average, 2011
(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 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, 2011. The equipment was purchased on January 1, 2010. 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

Which method of translating a foreign subsidiary's financial statements is correct?

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 12

Certain balance sheet accounts of a foreign subsidiary of Parker Company at December 31, 2011, 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 13

Ginvold Co. began operating a subsidiary in a foreign country on January 1, 2011 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, 2012. A building was then purchased for §170,000 on January 1, 2011. 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, 2011. 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 14

A foreign subsidiary of a U.S. corporation purchased equipment on January 4, 2008.
(A.) How would depreciation expense on the equipment be translated for 2011?
(B.) How would depreciation expense on the equipment be remeasured for 2011?

Accepted Answer

(A.) Depreciation expense would be trans

Question 15

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 16

Quadros Inc., a Portuguese firm was acquired by a U.S. company on January 1, 2010. Selected account balances are available for the year ended December 31, 2011, and are stated in euro, the local currency.   Relevant exchange rates for 1 euro are given below:   Assume the functional currency is the U.S. dollar, compute the U.S. balance sheet amount for accumulated depreciation for 2011.

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 17

Kennedy Company acquired all of the outstanding common stock of Hastie Company of Canada for U.S. $350,000 on January 1, 2011, 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, 2011, Hastie's trial balance net income was translated at U.S. $25,000. The average exchange rate for the Canadian dollar during 2011 was U.S. $.68, and the 2011 year-end exchange rate was U.S. $.65.
Calculate the U.S. dollar amount allocated to the patent at January 1, 2011.

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 18

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 19

For a foreign subsidiary that uses the U.S. dollar as its functional currency, what method is required to ready the financial statements for consolidation?

Accepted Answer

A)  Current/Noncurrent Method. 
B)  Monetary/Nonmonetary Method. 
C)  Current Rate Method. 
D)  Temporal Method. 
E)  Indirect Method. 
A)  Current/Noncurrent Method. 
B)  Monetary/Nonmonetary Method. 
C)  Current Rate Method. 
D)  Temporal Method. 
E)  Indirect Method.

Question 20

On January 1, 2011, Fandu Corp. began operations of a foreign subsidiary. On April 1, 2011, the subsidiary purchased inventory costing 150,000 stickles. One-fourth of this inventory remained unsold at the end of 2011 while 40% of the liability from the purchase had not yet been paid. The pertinent indirect exchange rates were:   Required:
What should have been the December 31, 2011 inventory and accounts payable balances for this foreign subsidiary as translated into U.S. dollars? (Round your answers to the nearest whole dollar.)

Accepted Answer

The answer of On January 1, 2011, Fandu Corp. began...

Which accounts are translated using current exchange rates?

Sinkal Co. was formed on January 1, 2011 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 2011: What was the amount of the translation adjustment for 2011?

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

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

Which method of translating a foreign subsidiary's financial statements is correct?

Certain balance sheet accounts of a foreign subsidiary of Parker Company at December 31, 2011, 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?

A foreign subsidiary of a U.S. corporation purchased equipment on January 4, 2008. (A.) How would depreciation expense on the equipment be translated for 2011? (B.) How would depreciation expense on the equipment be remeasured for 2011?

In accounting, the term translation refers to

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

For a foreign subsidiary that uses the U.S. dollar as its functional currency, what method is required to ready the financial statements for consolidation?

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 - Intercompany Asset Transactions

Intercompany Debt, Consolidated Statement of 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 for Not-For-Profit Organizations

Accounting for Estates and Trusts

Filters

Exam 10: Translation of Foreign Currency Financial Statements

Which accounts are translated using current exchange rates?

Sinkal Co. was formed on January 1, 2011 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 2011: What was the amount of the translation adjustment for 2011?

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

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

Which method of translating a foreign subsidiary's financial statements is correct?

Certain balance sheet accounts of a foreign subsidiary of Parker Company at December 31, 2011, 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?

A foreign subsidiary of a U.S. corporation purchased equipment on January 4, 2008. (A.) How would depreciation expense on the equipment be translated for 2011? (B.) How would depreciation expense on the equipment be remeasured for 2011?

In accounting, the term translation refers to

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

For a foreign subsidiary that uses the U.S. dollar as its functional currency, what method is required to ready the financial statements for consolidation?

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 - Intercompany Asset Transactions

Intercompany Debt, Consolidated Statement of 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 for Not-For-Profit Organizations

Accounting for Estates and Trusts

Filters