Question 1

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

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 2

Boerkian Co. started 2011 with two assets: cash of §26,000 (stickles) and land that originally cost §72,000 when acquired on April 4, 2008. On May 1, 2011, the company rendered services to a customer for §36,000, an amount immediately paid in cash. On October 1, 2011, 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:  
-Required:
Assume that Boerkian was a foreign subsidiary of a U.S. multinational company and the local currency of the subsidiary (stickle) is the functional currency. On the December 31, 2011 balance sheet, what was the translated value of the Land account?

Accepted Answer

The answer of Boerkian Co. started 2011 with two assets:...

Question 3

Quadros Inc., a Portugese 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.  
-Assume the functional currency is the U.S. dollar, compute the U.S. income statement amount for depreciation expense for 2011.

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 4

Quadros Inc., a Portugese 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.  
-Assume the functional currency is the euro, compute the U.S. income statement amount for sales for 2011.

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 5

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 6

Boerkian Co. started 2011 with two assets: cash of §26,000 (stickles) and land that originally cost §72,000 when acquired on April 4, 2008. On May 1, 2011, the company rendered services to a customer for §36,000, an amount immediately paid in cash. On October 1, 2011, 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 U.S. dollar is the functional currency. On the December 31, 2011 balance sheet, what was the remeasured value of the Land account?

Accepted Answer

The answer of Boerkian Co. started 2011 with two assets:...

Question 7

Under the temporal method, depreciation expense 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 8

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 9

Quadros Inc., a Portugese 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.  
-Assume the functional currency is the euro, 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 10

Quadros Inc., a Portugese 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.  
-Assume the functional currency is the U.S. dollar, compute the U.S. income statement amount for sales for 2011.

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 11

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

Accepted Answer

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

Question 12

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 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. 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: $\begin{array}{ll}
\text { January } 1,2011 & \S 1=\$ 2.40 \
\text { October } 1,2011 & \S 1=\$ 2.22 \
\text { Average for } 2011 & \S 1=\$ 2.28 \
\text { December } 31,2011 & \S 1=\$ 2.16
\end{array}$
-Prepare a statement of retained earnings for this subsidiary in stickles and then translate the amounts into U.S. dollars.

Accepted Answer

Ginvold Co. Subsidia

Question 14

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 15

Under the current rate method, property, plant & equipment 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 16

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)  $.90. 
B)  $1.00. 
C)  $.95. 
D)  $.9474. 
E)  $1.0556. 
A)  $.90. 
B)  $1.00. 
C)  $.95. 
D)  $.9474. 
E)  $1.0556.

Question 17

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:
Identify the exchange rate used to remeasure the items 6-10 when the functional currency is the U.S. dollar:
 $\begin{array}{lr}
\text { 1. October 1,2011 } & \text { Land. } \_\_\_\
\text { 2. January 1,2011 } & \text { Equipment. } \_\_\_\
\text { 3. December } 31,2011 & \text { Bonds payable. } \_\_\_\
\text { 4. January 1, 2011 } & \text { Common stock. } \_\_\_\
\text { 5. December 31,2011 } & \text { Retained earnings. } \_\_\_\
\text { 6. December 31,2011 } & \text { Land. }\_\_\_ \
\text { 7. Composite, using multiple dates } & \text { Equipment. }\_\_\_ \
\text { 8. January 1, 2011 } & \text { Bonds payable. }\_\_\_ \
\text { 9. December 31,2011 } & \text { Common stock. }\_\_\_ \
\text { 10. Composite, using multiple dates } & \text { Retained earnings. }\_\_\_
\end{array}$

Accepted Answer

The answer of A foreign subsidiary was acquired on January...

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

Under the temporal method, depreciation expense would be remeasured at what rate?

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

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

Which accounts are translated using current exchange rates?

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?

Under the current rate method, property, plant & equipment would be translated at what rate?

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?

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 Flo

Consolidated Financial Statements - Ownership Patterns and Income

Segment and Interim Reporting

Foreign Currency Transactions and Hedging Foreign Exchange Risk

Worldwide Accounting Diversity and International Standards

Financial Reporting and the Securities and Exchange Commission

Accounting for Legal Reorganizations and Liquidations

Partnerships: Formation and Operations

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

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

Under the temporal method, depreciation expense would be remeasured at what rate?

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

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

Which accounts are translated using current exchange rates?

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?

Under the current rate method, property, plant & equipment would be translated at what rate?

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?

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 Flo

Consolidated Financial Statements - Ownership Patterns and Income

Segment and Interim Reporting

Foreign Currency Transactions and Hedging Foreign Exchange Risk

Worldwide Accounting Diversity and International Standards

Financial Reporting and the Securities and Exchange Commission

Accounting for Legal Reorganizations and Liquidations

Partnerships: Formation and Operations

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