Chapter 10 Translation of Foreign Currency Financial Statements.pdf

Chapter 10 Translation of Foreign Currency Financial Statements

File: Chapter 10 Translation of Foreign Currency Financial Statements Multiple Choice [QUESTION] 1. In accounti accounting, ng, the term translation refers to A) the calculation of gains gains or losses from hedging hedging transactions. B) the calculation of exchange rate gains or losses on individual individual transactions in foreign currencies. C) the procedure required to identify identify a company's functional functional currency. D) the calculation of gains gains or losses from all transactions transactions for the year. E) a procedure to prepare a foreign foreign subsidiary's financial financial statements for consolidation. consolidation. Answer: E Difficulty: Easy [QUESTION] 2. What is is a company' company'ss functional currency ? A) the currency of the primary economic environment in which which it operates. B) the currency of the country where where it has its headquarters. headquarters. C) the currency in which it prepares its financial statements. statements. D) the reporting currency of its its parent for a subsidiary. subsidiary. E) the currency it chooses to designate designate as such. Answer: A Difficulty: Easy [QUESTION] 3. According According to SFAS 52 , which method is usually required for translating a foreign subsidiary's financial statements into the parent's reporting currency? A) the temporal temporal method method.. B) the current current rate rate method. method. C) the current/noncurrent current/noncurrent method. D) the monetary/nonmonetary monetary/nonmonetary method. E) the noncurrent noncurrent rate method. Answer: B Difficulty: Easy [QUESTION] 4. In translating a foreign subsidiary's subsidiary's financial statements, which exchange rate does the current method require for the subsidiary's assets and liabilities? A) the exchange rate in effect when each asset asset or liability was acquired. B) the average average exchange exchange rate for the current year. C) a calculated exchange exchange rate based on market value. D) the exchange exchange rate in effect as of the balance sheet sheet date. E) the exchange exchange rate in effect at the start of the current current year. Answer: D Difficulty: Easy [QUESTION] 5. The translation adjustment adjustment from translating a foreign subsidiary's subsidiary's financial statements should be shown as A) an asset or liability (depending on the balance) on the consolidated consolidated balance sheet. B) a revenue or expense (depending (depending on the balance) on the consolidated consolidated income statement. statement.

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C) a component of stockholders' stockholders' equity on the the consolidated balance sheet. sheet. D) a component of cash flows from financing activities on the consolidated consolidated statement of cash flows. E) an element of the notes which which accompany the consolidated consolidated financial statements. statements. Answer: C Difficulty: Easy REFERENCE: Ref. 10_01 Westmore, Ltd. is a British subsidiary subsidiary of a U.S. company. Westmore's functional currency is the pound sterling. The following exchange exchange rates were in effect during 2008: 2008:

Jan. 1 Ju n e 3 0 Dec. 31 Weighte eighted d average average rate for the year year

$1 = £.625 $1 = £.610 $1 = £.620 $1 = £.630

[QUESTION] REFER TO: Ref. 10_01 6. Westmore reported sales of £1,500,000 £1,500,000 during 2008. 2008. What amount (rounded) (rounded) would have have been included for this subsidiary in calculating consolidated sales? A) $2,380,952 $2,380,952.. B) $2,400,00 $2,400,000. 0. C) $2,429,15 $2,429,150. 0. D) $2,419,355 $2,419,355.. E) $2,425,876 $2,425,876.. Answer: A Difficulty: Medium [QUESTION] REFER TO: Ref. 10_01 7. On December 31, Westmore had accounts accounts receivable of £280,000. £280,000. What amount (rounded) (rounded) would have been included for this subsidiary in calculating consolidated accounts receivable? A) $444,444. $444,444. B) $451,613. $451,613. C) $142,600. $142,600. D) $176,400. $176,400. E) $452,830. $452,830. Answer: B Difficulty: Medium [QUESTION] 8. Gunther Co. established established a subsidiary subsidiary in Mexico on January 1, 2008. 2008. The subsidiary engaged in the the following transactions during 2008:

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Jan. Ja n. 1

Dec. 31

Sold com Sold common mon st stoc ock k to Gu Gunt nthe herr fo forr 5, 5,000 000,0 ,000 00 pe peso sos. s. Pur Purcha chase sed d inventory throughout the year, 8,000,000 pesos (¼ remained at yearend). Sales throughout the year totaled 12,000,000 pesos. Purchased equipment for 1,000,000 pesos.

Gunther concluded that the subsidiary’s unctional currency was the dollar. Exchange rates for 2008 were: Jan. 1 1 peso = $.20 31 1 peso = $.19 Dec. 31 1 peso = $.16 Weig We ight hted ed av aver erag agee rat atee for th thee yea earr 1 pe pesso = $. $.18 18

What amount of foreign exchange gain or loss would have been recognized on Gunther's consolidated income statement for 2008? A) $200,400 $200,400 loss. loss. B) $90,000 $90,000 loss. loss. C) $226,000 $226,000 loss. D) $235,600 $235,600 loss. loss. E) $250,000 $250,000 loss. loss. Answer: E Difficulty: Hard REFERENCE: Ref. 10_02 Darron Co. was formed on January 1, 2009 as a wholly owned foreign subsidiary of a U.S. corporation. Darron's functional currency was the stickle stickle (§). The following transactions and events events occurred during 2007:

Jan. 1 Jan. June Ju ne 30 Dec. De c. 31

Darron Darr on is issu sued ed co comm mmon on st stoc ock k fo forr §1 §1,0 ,000 00,0 ,000 00.. Darr Da rron on pa paid id di divi vide dend ndss of §2 §20, 0,00 000. 0. Darr Da rron on re repo port rted ed net in incom comee of §8 §80,0 0,000 00 fo forr th thee ye year ar..

Exchange rates for 2009 were: Jan. 1 Ju n e 3 0 Dec. 31 Weighted ave verrag agee rate for the yea earr

$1 = §.48 $1 = §.46 $1 = §.42 $1 = §.44

[QUESTION] REFER TO: Ref. 10_02 9. What exchange rate should have been used in translating Darron's Darron's revenues and expenses for 2009? A) $1 = §.48. §.48. B) $1 = §.44. §.44. C) $1 = §.46. §.46. D) $1 = §.42. §.42. E) $1 = §.45. §.45. Answer: B

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Difficulty: Easy [QUESTION] REFER TO: Ref. 10_02 10. What was the amount of the the translation adjustment adjustment for 2009? A) $293,479 increase in relative value value of net assets. assets. B) $302,137 increase increase in relative value value of net assets. assets. C) $300,160 increase increase in relative value value of net assets. assets. D) $187,418 increase in relative value value of net assets. assets. E) $270,800 increase increase in relative value value of net assets. Answer: B Difficulty: Hard [QUESTION] 11. Which of the following translation methods methods was originally mandated mandated by SFAS No. 8 ? A) Current/Noncurrent Method. B) Monetary/Nonmonetary Monetary/Nonmonetary Method. C) Current Current Rate Method Method.. D) Temporal Temporal Method. Method. E) Indirect Indirect Method. Method. Answer: D Difficulty: Easy [QUESTION] 12. Which accounts are remeasured using current exchange rates? A) all revenues revenues and expenses. expenses. B) all assets and liabilities. liabilities. C) all monetary assets and liabilities. D) all current assets and liabilities. E) all noncurrent noncurrent assets and liabilities. liabilities. Answer: D Difficulty: Medium [QUESTION] 13. For a foreign subsidiary that uses the US dollar as its functional currency, what what translation method is required? A) Current/Noncurrent Method. B) Monetary/Nonmonetary Monetary/Nonmonetary Method. C) Current Current Rate Method Method.. D) Temporal Temporal Method. Method. E) Indirect Indirect Method. Method. Answer: D Difficulty: Medium REFERENCE: Ref. 10_03 Dilty Corp. owned a subsidiary in France. Dilty concluded that the subsidiary's subsidiary's functional currency was the U.S. dollar. [QUESTION] REFER TO: Ref. 10_03 14. Which one of the following statements would would justify this conclusion? conclusion?

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A) Most of the subsidiary's subsidiary's sales and purchases were with companies companies in the U.S. B) Dilty's functional functional currency is the dollar and and Dilty is the parent. parent. C) Dilty's other subsidiaries subsidiaries all had the dollar dollar as their functional currency. currency. D) Generally accepted accounting principles principles require that the subsidiary's subsidiary's functional currency must be the dollar if consolidated financial statements are to be prepared. E) Dilty Dilty is located located in the U.S. U.S. Answer: A Difficulty: Medium [QUESTION] REFER TO: Ref. 10_03 15. What must Dilty do to ready the subsidiary's subsidiary's financial statements for consolidation? A) first translate them, then remeasure them. B) first remeasure them, then translate them. them. C) state all of the subsidiary's accounts in U.S. dollars using using the exchange rate in effect at the balance sheet date. D) translate translate them. them. E) remeasure remeasure them. them. Answer: E Difficulty: Easy REFERENCE: Ref. 10_04 Certain balance sheet accounts of a foreign subsidiary of the Tulip Co. had been stated in U.S. dollars as follows:

Accounts receivable — current Accounts receivable — long-ter erm m Prepaid insurance Goodwill Totals

Statee at Stat Current Historical Rates Rates $ 280,000 $ 308,000 140,000 154,000 70,000 77,000 112,000 119,000 $ 602,000 $ 658,000

[QUESTION] REFER TO: Ref. 10_04 16. If a foreign currency is the functional currency of this subsidiary, what total should should have been included in Tulip's balance sheet for the preceding items? A) $609,000. $609,000. B) $658,000. $658,000. C) $602,000. $602,000. D) $630,000. $630,000. E) $616,000. $616,000. Answer: C Difficulty: Easy [QUESTION] REFER TO: Ref. 10_04 17. If the U.S. dollar is the functional currency of this subsidiary, what total should should have been included in

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Tulip's balance sheet for the items above? A) $609,000. $609,000. B) $658,000. $658,000. C) $602,000. $602,000. D) $630,000. $630,000. E) $616,000. $616,000. Answer: E Difficulty: Medium REFERENCE: Ref. 10_05 A subsidiary of Porter Inc., Inc., a U.S. company, was located in a foreign country. country. The functional currency of this subsidiary was the stickle stickle (§). The subsidiary acquired inventory inventory on credit on November 1, 2008, for §120,000 that was sold on January 17, 2009 for §156,000. The subsidiary paid for the inventory on January 31, 2009. Currency exchange rates between between the dollar and the stickle stickle were as follows: November 1, 2008 Dece Decemb mber er 31,2 31,200 008 8 January 1, 2009 Janu Januar ary y 31, 31, 2009 2009 Aver Averag agee for for 2009 2009

$.19 = §1 $.20 $.20 = §1 $.22 = §1 $.23 $.23 = §1 $.24 $.24 = §1

[QUESTION] 18. What figure would have been reported for this inventory inventory on Porter's consolidated balance sheet at December 31, 2008? A) $24,000. $24,000. B) $26,400. $26,400. C) $22,800. $22,800. D) $27,600. $27,600. E) $28,800. $28,800. Answer: A Difficulty: Easy [QUESTION] REFER TO: Ref. 10_05 cost of goods sold on Porter's consolidated income 19. What figure would would have been reported for cost at December 31, 2009? statement at A) $24,000. $24,000. B) $26,400. $26,400. C) $22,800. $22,800. D) $27,600. $27,600. E) $28,800. $28,800. Answer: E Difficulty: Medium [QUESTION] 20. A U.S. company's foreign subsidiary had the following following amounts in stickles (§) in 2009:

Cost o goo s so Ending inventory Beginning inventory

§ 12,000,000 600,000 240,000

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The average exchange rate during 2009 was §1 = $.96. The beginning inventory inventory was acquired when the exchange exchange rate was §1 = $1.20. $1.20. The ending invento inventory ry was acquired acquired when the exchange exchange rate was §1 = $.90. The exchange exchange rate at December December 31, 2009 was §1 = $.84. Assuming Assuming that the foreign foreign country country had a highly inflationary economy, at what amount should the foreign subsidiary's cost of goods sold have been reflected in the 2009 U.S. dollar income statement? A) $11,253,60 $11,253,600. 0. B) $11,577,6 $11,577,600. 00. C) $11,649,6 $11,649,600. 00. D) $11,613,60 $11,613,600. 0. E) $11,523,60 $11,523,600. 0. Answer: D Difficulty: Hard [QUESTION] 21. A historical exchange exchange rate for a foreign subsidiary is best described as A) The rate at date of acquisition acquisition for a purchase transaction. transaction. B) The rate when the common common stock was originally issued for a purchase transaction. transaction. C) The average rate from date of acquisition acquisition to the date of balance balance sheet. D) The rate from the the prior year’s year’s balances. balances. E) The January January 1 exchange exchange rate. rate. Answer: A Difficulty: Medium [QUESTION] 22. A net asset balance balance sheet exposure exposure exists and the foreign currency currency appreciates. Which of the following statements is true? A) There is no translation adjustment. B) There is a transactio transaction n loss. C) There is a transact transaction ion gain. gain. D) There is a negative negative translation adjustment. E) There is a positive positive translation adjustment. Answer: E Difficulty: Medium [QUESTION] 23. A net asset balance balance sheet exposure exposure exists and the foreign currency currency depreciates. Which of the following statements is true? A) There is no translation adjustment. B) There is a transactio transaction n loss. C) There is a transact transaction ion gain. gain. D) There is a negative negative translation adjustment. E) There is a positive positive translation adjustment. Answer: D Difficulty: Medium [QUESTION] 24. A net liability liability balance sheet sheet exposure exists exists and the foreign foreign currency appreciates. appreciates. Which of the following statements is true? A) There is no translation adjustment. B) There is a transactio transaction n loss.

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C) There is a transact transaction ion gain. gain. D) There is a negative negative translation adjustment. E) There is a positive positive translation adjustment. Answer: D Difficulty: Medium [QUESTION] 25. A net liability liability balance sheet sheet exposure exists exists and the foreign foreign currency depreciates. depreciates. Which of the following statements is true? A) There is no translation adjustment. B) There is a transactio transaction n loss. C) There is a transact transaction ion gain. gain. D) There is a negative negative translation adjustment. E) There is a positive positive translation adjustment. Answer: E Difficulty: Medium [QUESTION] 26. Which method of translating a foreign subsidiary's subsidiary's financial statements is correct? A) Historical Historical rate rate method. B) Working Working capital capital method. method. C) Current Current rate method. method. D) Remeasureme Remeasurement. nt. E) Temporal Temporal method. method. Answer: C Difficulty: Easy [QUESTION] 27. Which method of remeasuring remeasuring a foreign subsidiary's subsidiary's financial statements is correct? A) Historical Historical rate rate method. B) Working Working capital capital method. method. C) Current Current rate method. method. D) Translati Translation. on. E) Temporal Temporal method. method. Answer: E Difficulty: Easy [QUESTION] 28. Under the temporal method, inventory at market would be be restated at what rate? A) Beginning Beginning of the the year rate. B) Average Average rate. C) Current Current rate. rate. D) Historical Historical rate. rate. E) Composite Composite amoun amount. t. Answer: C Difficulty: Medium [QUESTION] 29. Under the current rate method, method, inventory at market would be restated at what rate? A) Beginning Beginning of the the year rate. B) Average Average rate.

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C) Current Current rate. rate. D) Historical Historical rate. rate. E) Composite Composite amoun amount. t. Answer: C Difficulty: Medium [QUESTION] 30. Under the temporal method, common common stock would be be restated at what rate? A) Beginning Beginning of the the year rate. B) Average Average rate. C) Current Current rate. rate. D) Historical Historical rate. rate. E) Composite Composite amoun amount. t. Answer: D Difficulty: Easy [QUESTION] 31. Under the current rate method, method, common stock would be restated restated at what rate? A) Beginning Beginning of the the year rate. B) Average Average rate. C) Current Current rate. rate. D) Historical Historical rate. rate. E) Composite Composite amoun amount. t. Answer: D Difficulty: Easy [QUESTION] 32. Under the current rate method, method, property, plant & equipment equipment would be restated at what what rate? A) Beginning Beginning of the the year rate. B) Average Average rate. C) Current Current rate. rate. D) Historical Historical rate. rate. E) Composite Composite amoun amount. t. Answer: C Difficulty: Medium [QUESTION] 33. Under the temporal method, property, property, plant & equipment equipment would be restated at what what rate? A) Beginning Beginning of the the year rate. B) Average Average rate. C) Current Current rate. rate. D) Historical Historical rate. rate. E) Composite Composite amoun amount. t. Answer: D Difficulty: Medium [QUESTION] 34. Under the current rate method, method, retained earnings would would be restated at what rate? A) Beginning Beginning of the the year rate. B) Average Average rate. C) Current Current rate. rate.

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D) Historical Historical rate. rate. E) Composite Composite amoun amount. t. Answer: E Difficulty: Medium [QUESTION] 35. Under the temporal method, retained earnings would would be restated at what rate? A) Beginning Beginning of the the year rate. B) Average Average rate. C) Current Current rate. rate. D) Historical Historical rate. rate. E) Composite Composite amoun amount. t. Answer: E Difficulty: Medium [QUESTION] 36. Under the current rate method, method, depreciation expense would would be restated at what rate? A) Beginning Beginning of the the year rate. B) Average Average rate. C) Current Current rate. rate. D) Historical Historical rate. rate. E) Composite Composite amoun amount. t. Answer: B Difficulty: Medium [QUESTION] 37. Under the temporal method, depreciation depreciation expense would would be restated at what rate? A) Beginning Beginning of the the year rate. B) Average Average rate. C) Current Current rate. rate. D) Historical Historical rate. rate. E) Composite Composite amoun amount. t. Answer: D Difficulty: Medium [QUESTION] 38. Under the temporal method, how how would cost of goods goods sold be restated? A) Beginning Beginning of the the year rate. B) Average Average rate. C) Current Current rate. rate. D) Historical Historical rate. rate. E) Composite Composite amoun amount. t. Answer: E Difficulty: Medium [QUESTION] 39. Under the current rate method, method, how would cost of goods goods sold be restated? A) Beginning Beginning of the the year rate. B) Average Average rate. C) Current Current rate. rate. D) Historical Historical rate. rate.

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E) Composite Composite amoun amount. t. Answer: B Difficulty: Medium [QUESTION] 40. How is the disposition of the translated gain gain or loss reported on the parent company's financial statements? A) Net income/loss on on the income statement. statement. B) Cumulative translation translation adjustment adjustment as a deferred asset. asset. C) Cumulative translation translation adjustment as a deferred liability. liability. D) Other comprehensive comprehensive income. E) Retained Retained earning earnings. s. Answer: D Difficulty: Medium [QUESTION] 41. How is the disposition of the remeasurement gain or loss reported reported on the parent company's financial statements? A) Net income/loss on on the income statement. statement. B) Cumulative translation translation adjustment adjustment as a deferred asset. asset. C) Cumulative translation translation adjustment as a deferred liability. liability. D) Other comprehensive comprehensive income. E) Retained Retained earning earnings. s. Answer: A Difficulty: Medium [QUESTION] 42. A highly inflationary inflationary economy economy is defined as A) Cumulative 5-year 5-year inflation in excess of 100%. B) Cumulative 3-year 3-year inflation in excess of 100%. C) Cumulative 5-year 5-year inflation in excess of 90%. D) Cumulative 3-year 3-year inflation in excess of 90%. E) Any country designated designated as a company operating operating in an underworld economy. economy. Answer: B Difficulty: Medium [QUESTION] 43. If a subsidiary is operating in a highly inflationary inflationary economy, how are the financial statements to be restated? A) Historical Historical rate. rate. B) Working Working capital capital rate. rate. C) Translati Translation. on. D) Remeasureme Remeasurement. nt. E) Current Current rate. Answer: D Difficulty: Medium [QUESTION] 44. When consolidating a foreign subsidiary, subsidiary, which of the following statements statements is true? A) Parent reports a cumulative translation translation adjustment adjustment using the equity method. method. B) Parent's reports a gain or or loss in net income using the equity method.

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C) Subsidiary's cumulative cumulative translation adjustment is carried forward forward to the consolidated balance sheet. D) Subsidiary's income/loss is is carried forward forward to the consolidated consolidated balance sheet. sheet. E) All foreign currency gains/losses gains/losses are eliminated on the consolidated income income statement and balance sheet. Answer: A Difficulty: Hard [QUESTION] 45. When preparing a consolidating statement statement of cash flows, which of the following statements is false? A) Subsidiary dividends dividends are deducted as a financing activity. B) Noncontrolling interest interest in subsidiary dividends dividends are deducted as a financing activity. C) Parent dividends are deducted deducted as a financing activity. activity. D) Amortization of cost over book value of the investment investment in subsidiary is added to net income as an operating activity using the indirect method. E) Intercompany gains gains do not appear on the consolidated consolidated statement of of cash flows. Answer: A Difficulty: Medium REFERENCE: Ref. 10_06 The following account balances are available for Esposito, an Italian U.S. subsidiary for 2009:

Beginning inventory Purchases Ending inventory

€

20,000 400,000 15,000

Relevant exchange rates follow: 4th qu quar arte terr av aver erag age, e, 20 2008 08 December 31, 2008 Average 2009 4th qua uarrter ave vera rag ge, 2009 December 31, 2009

$.93 = € 1 $.93 . 94 = 1 . 96 = 1 .99 .9 9= 1 1 . 01 = 1

[QUESTION] REFER TO: Ref. 10_06 46. Compute the cost of goods goods sold for 2009 in U.S. dollars dollars using the temporal temporal method. A) $376,650. $376,650. B) $387,750. $387,750. C) $388,800. $388,800. D) $400,950. $400,950. E) $409,050. $409,050. Answer: B Difficulty: Medium [QUESTION] REFER TO: Ref. 10_06 47. Compute the cost of goods goods sold for 2009 in U.S. dollars dollars using the current rate method. A) $376,550. $376,550. B) $387,750. $387,750. C) $388,800. $388,800.

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D) $400,950. $400,950. E) $409,050. $409,050. Answer: C Difficulty: Medium [QUESTION] REFER TO: Ref. 10_06 48. Compute ending inventory inventory for 2009 under the temporal method. A) $13,950. $13,950. B) $14,100. $14,100. C) $14,400. $14,400. D) $14,850. $14,850. E) $15,150. $15,150. Answer: D Difficulty: Medium [QUESTION] REFER TO: Ref. 10_06 49. Compute ending inventory inventory for 2009 under the current rate method. A) $13,950. $13,950. B) $14,100. $14,100. C) $14,400. $14,400. D) $14,850. $14,850. E) $15,150. $15,150. Answer: E Difficulty: Medium REFERENCE: Ref. 10_07 The following inventory balances for 2008 in local currency units (LCU) are given:

Inventory at cost Inven In vento tory ry at re repl place aceme ment nt co cost st Invent Inv entory ory at net rea realiz lizabl ablee val value ue Inventory at net realizable value Les esss no norm rmal al pr prof ofit it ma marg rgin in

320,000 LCU 300, 30 0,000 000 420,000 420 ,000 400, 40 0,00 000 0

The following exchange rates are given for 2008: January 1, 2008 Average, 2008 4th quarter average, 2008 December 31, 2008

$1.50 = 1 LCU 1.48 = 1 1.43 = 1 1.42 = 1

[QUESTION] REFER TO: Ref. 10_07 50. Compute the December 31, 2008, 2008, inventory balance using using the lower of cost or market market method under the temporal method. A) $429,000. $429,000. B) $457,600. $457,600. C) $596,000. $596,000.

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D) $568,000. $568,000. E) $473,600. $473,600. Answer: A Difficulty: Medium [QUESTION] REFER TO: Ref. 10_07 51. Compute the December 31, 2008, 2008, inventory balance using using the current rate method. A) $454,400. $454,400. B) $457,600. $457,600. C) $596,000. $596,000. D) $568,000. $568,000. E) $473,600. $473,600. Answer: A Difficulty: Medium REFERENCE: Ref. 10_08 Perez Company, a Mexican subsidiary of a U.S. company, sold equipment costing 200,000 pesos with accumulated depreciation of of 75,000 pesos for 140,000 140,000 pesos on March 1, 2009. The equipment was purchased on January 1, 2008, when the exchange rate for the peso was $.11. Relevant exchange rates for the peso are as follows:

January 1, 2008 March 1, 2009 December 31, 2009 Average, 2009

$ .1071 . 10 6 . 10 2 . 105

[QUESTION] REFER TO: Ref. 10_08 52. The financial financial statements statements for Perez are translate translated d by its U.S. parent. What amount amount of gain or loss would be reported in its translated income statement? A) $1,530. $1,530. B) $1,575 $1,575.. C) $1,590 $1,590.. D) $1,090. $1,090. E) $1,650. $1,650. Answer: C Difficulty: Medium [QUESTION] REFER TO: Ref. 10_08 53. The financial financial statements statements for Perez are remeasured remeasured by its U.S. parent. parent. What amount amount of gain or loss would be reported in its translated income statement? A) $1,530. $1,530. B) $1,575 $1,575.. C) $1,465 $1,465.. D) $1,090. $1,090. E) $1,650. $1,650. Answer: D Difficulty: Hard

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REFERENCE: Ref. 10_09 Certain balance sheet accounts of a foreign subsidiary of Parker Company at December 31, 2008, have been restated into U.S. dollars as follows:

Restated at Curr Cu rren entt Ra Rates tes

Cash Accounts receivable Inventory, at market Land Equipment (net) Total

Histo Hi storic rical al Ra Rate tes s

$ 47,500 95,000 76,000 57,000 142,500 $418,000

$ 45,000 9 0, 000 72 , 000 54 , 000 135,000 $396,000

[QUESTION] REFER TO: Ref. 10_09 54. Assuming the functional currency of the subsidiary subsidiary is the U.S. dollar, what total should be included in Parker's consolidated balance sheet at December 31, 2008, for the above items? A) $407,500. $407,500. B) $418,000. $418,000. C) $396,000. $396,000. D) $403,500. $403,500. E) $398,500. $398,500. Answer: A Difficulty: Medium [QUESTION] REFER TO: Ref. 10_09 55. Assuming the functional currency of the subsidiary subsidiary is the local currency, what total should be included in Parker's consolidated balance sheet at December 31, 2008, for the above items? A) $407,500. $407,500. B) $418,000. $418,000. C) $396,000. $396,000. D) $403,500. $403,500. E) $398,500. $398,500. Answer: B Difficulty: Easy [QUESTION] REFER TO: Ref. 10_09 56. If the current rate used to restate these balances is $.95, what was the historical rate used to restate the same balances? A) $.90. $.90. B) $1.00. $1.00. C) $.95. $.95. D) $.9474. $.9474. E) $1.0556. $1.0556. Answer: A Difficulty: Medium

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REFERENCE: Ref. 10_10 Kennedy Company acquired all of the outstanding common stock of Hastie Company of Canada for US$350,000 on January 1, 2009, when the exchange exchange rate for the Canadian dollar was was US$.70. The fair value of the net assets of Hastie was equal to their book value of C$450,000 (Canadian dollars) on the date of acquisition. Any excess cost over fair value was attributed to an unrecorded patent with a remaining life of five years. The functional currency of of Hastie is the Canadian dollar. dollar. For the year ended December 31, 2009, Hastie's Hastie's translated net net income was $25,000. The average exchange rate for the Canadian dollar during 2009 was US$.68, and the 2009 year-end exchange rate was US$.65. [QUESTION] REFER TO: Ref. 10_10 57. Calculate the US$ amount allocated allocated to the patent at January 1, 2009. A) $50,000. $50,000. B) $35,000. $35,000. C) $34,000. $34,000. D) $32,500. $32,500. E) $28,200. $28,200. Answer: B Difficulty: Medium [QUESTION] REFER TO: Ref. 10_10 58. Amortization of the patent, patent, translated, for 2009 would would be A) $7,000. $7,000. B) $10,000. $10,000. C) $6,800 $6,800.. D) $9,000. $9,000. E) $6,500. $6,500. Answer: C Difficulty: Medium [QUESTION] REFER TO: Ref. 10_10 59. Compute the amount of the patent reported on the consolidated consolidated balance sheet at December 31, 2009. A) $28,200. $28,200. B) 428,000. 428,000. C) $35,000. $35,000. D) $27,200. $27,200. E) $26,000. $26,000. Answer: E Difficulty: Medium [QUESTION] REFER TO: Ref. 10_10 60. Kennedy's share of Hastie's Hastie's net income for 2009 would be A) $18,000. $18,000. B) $15,000. $15,000. C) $18,200. $18,200. D) $16,000. $16,000. E) $18,500. $18,500.

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Answer: C Difficulty: Medium REFERENCE: Ref. 10_11 Quadros Inc., a Portugese firm was was acquired by a U.S. company on January 1, 2007. Selected account balances are available for the year ended December 31, 2008, and are stated in euro, the local currency.

Sales Inventory Invent ory (bought on Februa February ry 1, 2008) Equipment Equipm ent (bought on January 1, 2007) Dividends Divide nds (paid on Septembe Septemberr 1, 2008) Equipment 12/31/08 Accumulated depreciation – Equipment Depreciation expense – Equipment, 2008

€400,000

20,000 90,000

20,000 45,000 9,000

Relevant exchange rates are given below: January 1, 2007 January 1, 2008 February 1, 2008 September 1, 2008 December 31, 2008 4th qua uarrter ave vera rag ge, 2007 th 4 qua uarrter ave vera rag ge, 2008 Average, 2008

$ .91 .93 .94 .97 1.01 .90 .98 .95

[QUESTION] REFER TO: Ref. 10_11 61. Assume the functional functional currency is the euro, compute the the restated amount for sales for for 2008. A) $364,000. $364,000. B) $372,000. $372,000. C) $380,000. $380,000. D) $360,000. $360,000. E) $404,000. $404,000. Answer: C Difficulty: Easy [QUESTION] REFER TO: Ref. 10_11 62. Assume the functional currency is the euro, compute the restated amount for inventory inventory for 2008. A) $18,600. $18,600. B) $19,600. $19,600. C) $18,000. $18,000. D) $20,200 $20,200 E) $19,000. $19,000. Answer: D Difficulty: Easy [QUESTION] REFER TO: Ref. 10_11

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63. Assume the functional currency is the euro, compute the restated amount for equipment equipment for 2008. A) $81,900. $81,900. B) $90,900. $90,900. C) $83,700. $83,700. D) $88,200. $88,200. E) $85,500. $85,500. Answer: B Difficulty: Medium [QUESTION] REFER TO: Ref. 10_11 64. Assume the functional currency is the euro, compute the restated amount for dividends dividends for 2008. A) $19,000. $19,000. B) $20,200. $20,200. C) $18,600. $18,600. D) $19,400. $19,400. E) $19,600. $19,600. Answer: D Difficulty: Easy [QUESTION] REFER TO: Ref. 10_11 65. Assume the functional functional currency is the euro, compute the the restated amount for accumulated accumulated depreciation for 2008. A) $40,950. $40,950. B) $41,850. $41,850. C) $45,450. $45,450. D) $42,750. $42,750. E) $44,100. $44,100. Answer: C Difficulty: Medium [QUESTION] REFER TO: Ref. 10_06 66. Assume the functional currency is the euro, compute the restated amount for depreciation depreciation expense for 2008. A) $8,190. $8,190. B) $8,370 $8,370.. C) $8,820 $8,820.. D) $9,090. $9,090. E) $8,550. $8,550. Answer: E Difficulty: Medium [QUESTION] REFER TO: Ref. 10_11 67. Assume the functional functional currency is the U.S. dollar, compute compute the restated amount for sales sales for 2008. A) $364,000. $364,000. B) $372,000. $372,000. C) $380,000. $380,000. D) $360,000. $360,000.

Page 18


E) $404,000. $404,000. Answer: C Difficulty: Easy [QUESTION] REFER TO: Ref. 10_11 68. Assume the functional currency is the U.S. dollar, compute the restated amount amount for inventory for 2008. A) $18,600. $18,600. B) $19,600. $19,600. C) $18,000. $18,000. D) $20,200. $20,200. E) $19,000. $19,000. Answer: B Difficulty: Medium [QUESTION] REFER TO: Ref. 10_11 69. Assume the functional functional currency is the U.S. dollar, compute compute the restated amount for equipment equipment for 2008. A) $81,900. $81,900. B) $90,900. $90,900. C) $83,700. $83,700. D) $88,200. $88,200. E) $85,500. $85,500. Answer: A Difficulty: Medium [QUESTION] REFER TO: Ref. 10_11 70. Assume the functional currency is the U.S. dollar, compute the restated amount amount for dividends for 2008. A) $19,000. $19,000. B) $20,200. $20,200. C) $18,600. $18,600. D) $19,400. $19,400. E) $19,600. $19,600. Answer: D Difficulty: Easy [QUESTION] REFER TO: Ref. 10_11 71. Assume the functional functional currency is the U.S. dollar, compute compute the restated amount for accumulated accumulated depreciation for 2008. A) $40,950. $40,950. B) $41,850. $41,850. C) $45,450. $45,450. D) $42,750. $42,750. E) $44,100. $44,100. Answer: A Difficulty: Medium

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[QUESTION] REFER TO: Ref. 10_11 72. Assume the functional functional currency is the U.S. dollar, compute compute the restated amount for depreciation depreciation expense for 2008. A) $8,190. $8,190. B) $8,370 $8,370.. C) $8,820 $8,820.. D) $9,090. $9,090. E) $8,550. $8,550. Answer: A Difficulty: Medium [QUESTION] REFER TO: Ref. 10_11 73. When translating Quadros' financial financial statements, which of the following statements statements is true? A) There will be a remeasurement gain gain reported on the consolidated consolidated income statement. statement. B) There will be a remeasurement loss loss reported on the consolidated consolidated income statement. statement. C) There will be a positive cumulative cumulative translation adjustment reported on the the consolidated consolidated balance sheet. D) There will be a positive cumulative cumulative translation translation adjustment reported on the the consolidated income statement. E) There will be a transaction transaction gain reported on the consolidated consolidated income statement. statement. Answer: C Difficulty: Medium Essay [QUESTION] 74. A foreign subsidiary subsidiary was purchased purchased on January 1, 2008. Determine the exchange exchange rate used to restate the following accounts at December 31, 2008. Land was purchased on October October 1, 2008. Relevant exchange dates follow: (A) January 1, 2008 (B) October 1, 2008 (C) December 31, 2008 (D) Average, 2008 (E) Composite, using multiple dates. Identify the exchange rate used to translate items 1-5: ____ 1. Land. ____ 2. Equipment. ____ 3. Bonds payable. ____ 4. Common stock. ____ 5. Retained earnings. Identify the exchange rate used to remeasure the items 6-10: ____ 6. Land. ____ 7. Equipment. ____ 8. Bonds payable. ____ 9. Common stock. ____ 10. Retained earnings. Answer: (1.) (1.) C; C; (2) (2) C; (3.) (3.) C; (4.) (4.) A; (5.) (5.) E; (6.) (6.) B; (7.) A; (8.) (8.) C; (9.) (9.) A; (10.) (10.) E Difficulty: Medium

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[QUESTION] 75. In translating a foreign subsidiary's subsidiary's financial statements, what exchange rate should be used for the subsidiary's revenues and expenses? Answer: The historical rate that was in effect when the revenues and expenses were incurred should be used unless those revenues and expenses occur throughout the year, then a weighted average exchange rate for the year may be used. Difficulty: Medium [QUESTION] 76. How can a parent corporation determine the functional currency for a foreign subsidiary subsidiary that conducts business in more than one country? Answer: If the foreign subsidiary has distinct and separable operations in different countries, each of these operations can use a different currency. If the subsidiary does not have distinct operations operations in different countries, the currency in which the most transactions are carried out should be selected. Difficulty: Medium [QUESTION] 77. What exchange rate should be used to translate (a) revenues and expenses that occur throughout throughout the year and (b) a gain or loss that occurs on a specific day? Answer: Revenues and expenses occurring throughout the year may be translated using the average exchange rate for the year. A gain or loss occurring on a specific date should be translated using the rate in effect on that day. Difficulty: Easy [QUESTION] 78. Perkle Co. owned a subsidiary in Belgium; the subsidiary's subsidiary's functional currency was the Belgian franc. During 2009, Perkle engaged in hedging transactions transactions to offset part of the subsidiary's subsidiary's net asset position. How should the effects of exchange rate fluctuations on the currency hedge be accounted ac counted for? Answer: Any effect on the contract resulting from exchange rate fluctuations is classified as a translation adjustment, rather than as a foreign exchange gain or loss. Difficulty: Easy [QUESTION] 79. Under what circumstances would the translation translation of a foreign subsidiary's financial financial statements not be required? Answer: The translation of a foreign subsidiary's financial statements is not required in the following two situations: (A.) when the subsidiary's functional currency is the U.S. dollar. (B.) when the subsidiary operates in a highly inflationary economy. Difficulty: Medium [QUESTION] 80. A foreign subsidiary of a U.S. corporation purchased purchased equipment on January 4, 4, 2005. (A.) How would depreciation expense on the equipment be translated for 2008? (B.) How would depreciation expense on the equipment be remeasured for 2008? Answer: (A.) Depreciation expense would be translated translated using the average exchange exchange rate for 2008. (B.) Depreciation expense would be remeasured using the exchange rate in effect when the equipment was purchased. Difficulty: Medium

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[QUESTION] 81. What exchange rate would be used to translate the asset and liability account account balances of a foreign subsidiary? What justification can can be given for using this this exchange rate? Answer: Assets and liabilities are translated using the current exchange rate, the rate in effect at the balance sheet date. This rate is chosen because assets and liabilities are expected to affect future cash flows. Therefore, they should be translated using the most up-to-date up-to-date exchange rates available. Difficulty: Easy [QUESTION] 82. Farley Brothers, a U.S. company, had a subsidiary subsidiary in Italy. Italy. Under what conditions conditions would the U.S. dollar be the functional currency for this subsidiary? Answer: To determine the subsidiary's functional currency, Farley Brothers should look at the volume of the subsidiary's transactions transactions in various currencies. If most of the subsidiary's sales and purchases are in dollars, the dollar may be the logical choice for the functional functional currency. If there are many transactions between the subsidiary and the parent, and if most of the subsidiary's subsidiary's financing f inancing comes from f rom the U.S., the dollar may be a better choice than the lira or other European currencies. Difficulty: Easy [QUESTION] 83. What is the justification justification for the remeasurement of foreign foreign currency transactions? transactions? Answer: Remeasurement is needed for transactions denominated in a currency other than the entity's functional currency. A U.S. company which engages in transactions in other countries countries may have to remeasure some of its transactions. The implicit justification for remeasurement remeasurement is that foreign currency transactions which affect monetary assets and liabilities have a direct effect on the entity's cash flows. There will be direct effects on future cash flows in the functional currency, and thus an effect on net income. Difficulty: Medium [QUESTION] 84. Contrast the purpose of of remeasurement with the purpose purpose of translation. Answer: The purpose of translation is to transform a subsidiary's financial statements, prepared in its functional currency, into the reporting currency currency of the parent. The purpose of remeasurement is to restate transactions from one currency into the functional functional currency of the entity. Remeasurement is also required when a subsidiary's financial statements have been denominated in a currency other than the subsidiary's functional currency. Difficulty: Medium [QUESTION] 85. On January 1, 2008, 2008, Fandu Corp. started a foreign subsidiary. On April 1, 2008, 2008, the subsidiary subsidiary purchased inventory costing 150,000 stickles. One-fourth of this inventory remained r emained unsold at the end of 2008 while 40% of the liability from the purchase had not yet been paid. The pertinent exchange rates were:

January 1, 2008 April 1, 2008 Ave vera rage ge for 20 2008 08 Dece De cembe mberr 31, 20 2008 08

$1 = §3.0 $1 = §3.4 $1 = §3 §3.2 .2 $1 = §3 §3.6 .6

Required: What should have been the December 31, 2008 inventory and accounts payable balances for this foreign

Page 22


subsidiary as translated into U.S. dollars? (Round your answers to the nearest whole dollar.) Difficulty: Medium Answer:

Invent Inv entory ory §15 §150,0 0,000 00 x ¼ x 1 ÷ 3.6)) 3.6))

10,417

Accounts payable (§150,000 x 40% x (1 ÷ 3.6))

$ 16, 16,667 667

[QUESTION] 86. On January 1, 2008, Veldon Veldon Co., a U.S. corporation with the the U.S. dollar as its functional functional currency, established Malont Co. as a subsidiary. Malont is located in the country of Sorania, and its functional functional currency is the stickle. Malont engaged in the following following transactions during 2008:

January Janua ry 1, 20 2008 08 July Ju ly 14 14,, 20 2008 08 Octo Oc tobe berr 1, 20 2008 08

Issued Issu ed co comm mmon on st stock ock fo forr §5 §500 00,00 ,000 0 Sold So ld eq equi uipm pmen entt at a lo loss ss of §4 §40, 0,00 000 0 Paid Pa id di divi vide dend ndss of §60 §60,0 ,000 00

Malont’s operating revenues and expenses for 2008 were §800,000 and §650,000, respectively respectively.. The appropriate appropriate exchange rates were: Januaary 1, 2008 Janu July 14, 2008 October 1, 2008 Dece De cembe mberr 31 31,, 200 2008 8 Aver Av erag agee for 20 2008 08

$1 = §2. 2.5 5 $1 = §2.1 $1 = §2. 2.6 6 $1 = §2. §2.7 7 $1 = §2 §2.4 .4

Required: Calculate the translation adjustment for Malont. (Round your answers to the nearest whole dollar.) Answer: Stickles Rate U.S. Dollars Net assets, 1/1/08 §0 Change in net assets, 2008: Common stock issuance 500,000 $1 ÷ §2.5H $200,000 Operating income 150,000 $1 ÷ §2.4A 62,500 Loss on sale of equipment (40,000) $1 ÷ §2.1H (19,048) Dividends paid (60,000) $1 ÷ §2.6H (23,077) Net assets, 12/31/08 § 550,000 $(220,375) Net assets, 12/31/08 at current exchange rate § 550,000 $1 ÷ §2.7C 203,704 Translation adjustment , 2008 (negative) $ (16,671)

Difficulty: Hard REFERENCE: Ref. 10_12 Ginvold Co. began operating a subsidiary in a foreign country on January 1, 2008 by acquiring all of the common stock for §50,000. This subsidiary immediately immediately borrowed §120,000 on a five-year note with ten percent interest payable annually beginning on January 1, 2008. A building was then purchased for

Page 23


§170,000. This property had a ten-year anticipated life and no salvage salvage value and was to be depreciated using the straight-line method. method. The building was immediately rented for three years to a group of local doctors for §6,000 per month. By year-end, payments payments totaling §60,000 had been made. On October 1, §5,000 were paid for a repair made on that date. A cash dividend of of §6,000 was transferred back to Ginvold on December December 31, 2008. The functional currency currency for the subsidiary subsidiary was the the stickle. Currency exchange rates were as follows:

January 1, 2008 October 1, 2008 Average for 2008 December 31, 2008

$2.40 = §1 $2.22 = §1 $2.28 = §1 $2.16 = §1

[QUESTION] REFER TO: Ref. 10_12 87. Prepare Prepare an an income statement for this subsidiary in stickles and then translate these amounts into U.S. dollars. Answer:

Ginvold Co. Subsidiary Income Statement For the Year Ended December 31, 2008

Rent revenue Interest expense Depreciation expense Repair expense Net income

Stickles Rate § 72 7 2,000 x $2.28 A = ( 12,000) x $2.28 A = ( 17,000) x $2.28 A = $2.22 H = ( 5,000) x $2.22 § 38,000

U.S. Dollars $ 16 1 64,160 ( 27,360) ( 38,760) ( 11,100) $ 86,940

Difficulty: Medium [QUESTION] REFER TO: Ref. 10_12 88. Prepare a statement of retained earnings for this subsidiary in stickles stickles and then translate these amounts into U.S. dollars. Answer: Ginvold Co. Subsidiary Statement of Retained Earnings For the Year Ended Ended December December 31, 2008

Retained earnings, 1/1/08 Net income Dividends paid Retained earnings, 12/31/08

Stickles § 0 38,000 (6,000) §32,000

Rate (above) x $2.16H=

Difficulty: Medium

Page 24

U.S. Dollars $ 0 86,940 (12,960) $73,980


[QUESTION] REFER TO: Ref. 10_12 89. Prepare a balance sheet for this subsidiary in stickles and then translate these these amounts into U.S. dollars. Answer: Ginvold Co. Subsidiary Balance Sheet December December 31, 31, 2008

Cash Accounts receivable Building Accumulated depreciation Total assets Interest payable Note payable Common stock Retained earnings Translation adjustment Total liabilities and equities Calculation of Translation Adjustment Net assets, 1/1/08 Change in net assets, 2008: Common stock issuance Net income Dividends paid Net assets, 12/31/08 Net assets, 12/31/08 at current exchange rate Translation adjustment, 2008 (negative)

Stickles § 49,000 12,000 170,000 (17,000) §214,000

x x x x

§ 12,000 120,000 50,000 32,000

x $2.16C = x $2.16C = x $2.40H = (above)

$ 25,920 259,200 120,000 73,980

_______ §214,000

(below)

(16,860) $462,240

§

Rate $2.16C = $2.16C = $2.16C = $2.16C =

0

U. S. Dollars $ 105,840 25,920 367,200 (36,720) $ 462,240

$

0

50,000 38,000 (6,000) § 82,000

x $2.40 = (above) x $2.16 =

120,000 86,940 (12,960) $(193,980)

§ 82,000

x $2.16 =

177,120 $ (16,860)

Difficulty: Medium [QUESTION] REFER TO: Ref. 10_12 90. Prepare a statement of cash flows for this subsidiary in stickles and then translate translate these amounts into U.S. dollars. Answer: Ginvold Co. Subsidiary Statement of Cash Flows For the Year Ended, Ended, December December 31, 2008

Stickles

Rate

Operating activities:

Page 25

U. S. Dollars


Net income Depreciation Incr Increa ease se in acco accoun unts ts rece receiv ivab able le Increase in interest payable Net cash from operations Investing activities: Purchase of building Financing activities: Pro Proceeds fro from common stock Pro Proceeds fro from note paya ayable Dividend paid Net cash from financing Increase in cash Effect on exchange rate change on cash Cash at December 31, 2007 Cash at December 31, 2008

§ 38,000 17,000 (12, (12,00 000) 0) 12,000 55,000

(Above) x $2.28A = x $2.2 $2.28A 8A = x $2.28A =

$ 86,940 38,760 (27, (27,36 360) 0) 27,360 125,700

(170,000)

x $2.40H =

(408,000)

50,000 120,000 (6,000) 164,000 49,000

x $2.40H = x $2.40H = x $2.16H =

120,000 288,000 (12,960) 395,040 112,740

0 § 49,000

x $2.16C =

(6,900) 0 $105,840

Difficulty: Medium REFERENCE: Ref. 10_13 Boerkian Co. started 2008 with two assets: cash of §26,000 (stickles) and land that originally originally cost §72,000 when acquired on April 4, 2004. On May 1, 2008, the company rendered services to a customer for §36,000, an amount immediately immediately paid in cash. On October 1, 2008, the company company incurred an operating expense of §22,000 that was immediately paid. paid. No other transactions occurred during during the year. Currency exchange rates were as follows:

April 4, 2004 January 1, 2008 May 1, 2008 October 1, 2008 Average for 2008 December 31, 2008

§1 = $.28 §1 = $.29 §1 = $.30 §1 = $.31 §1 = $.32 §1 = $.35

[QUESTION] REFER TO: 10_13 91. Assume (1) that Boerkian was a foreign subsidiary of a U.S. multinational company company that used the U.S. dollar as its functional currency and (2) that the stickle was the functional currency of the subsidiary. What was the translation adjustment for this subsidiary for 2008? Answer:

Page 26


The translation adjustment is based on changes in the net assets of the subsidiary. Net assets, 1/1/08 Change in net asset assets, s, 2008: Rendered services Incurred expense Net assets, 12/31/08

§

98,000

x $.29 =

$

36,000 x $.30 = ( 22 22,0 ,000 00)) x $.31 = § 11 112, 2,00 000 0

Net assets, 12/31/08 at current cu rrent exchange rate

§ 11 112, 2,00 000 0

x $.35 =

Translation adjustment, 2008 (positive)

28,420

10,800 ( 6,820) $ 32,400

39,200 $

6,800

Difficulty: Medium [QUESTION] REFER TO: Ref. 10_13 92. Assume (1) that Boerkian was a foreign subsidiary of a U.S. multinational company company that used the U.S. dollar as its reporting currency and (2) that the U.S. dollar was the functional currency of the subsidiary. What was the remeasurement gain gain or loss for 2008? Difficulty: Medium Answer:

The remeasurement remeasurement gain or loss is based on changes in the net monetary assets assets o the subsidiary. Net monetary monetar y assets, 1/1/08 Change in net moneta monetary ry assets, 2008: Rendered services Incurred expense Net monetary monetar y assets, 12/31/08 Net monetary monetar y assets, 12/31/08 at current exchange rate

§

26,000

x $.29 =

36,000 x $.30 = ( 22 22,0 ,000 00)) x $.31 = § 40,000 §

Remeasurement gain

40,000

x $.35 =

$

7,540

$

10,800 6,820) 11,520

(

14,000 $

2,480

Difficulty: Hard [QUESTION] REFER TO: Ref. 10_13 93. Required: Assume that Boerkian was a foreign subsidiary of of a U.S. multinational company. company. On the December 31, 2008 balance sheet, what was the translated value of the Land account? Difficulty: Medium Answer:

Page 27


Translated value of land

§

72,000

x $.35 =

$

25,200

[QUESTION] REFER TO: Ref. 10_13 94. Assume that Boerkian Boerkian was a foreign foreign subsidiary of a U.S. multinational multinational company. On the December 31, 2008 balance sheet, what was the remeasured value of the Land account? Answer:

Remeasured value of land

§

Difficulty: Medium

Page 28

72,000

x $.28 =

$

20,160

Chapter 10 Translation of Foreign Currency Financial Statements.pdf

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