Exam 22: Accounting in a Global Market

Sunset Technological, Inc., a U.S. multinational producer of computer hardware, has subsidiaries located throughout the world. Sunset Technology purchased Werner Technology Company, a Swiss producer of computer hardware components, on January 1, 2010. Werner's financial statements are prepared and submitted in Swiss francs to Sunset's headquarters. Werner's adjusted trial balance at December 31, 2011, is presented below: Werner Technology Company Adjusted Trial Balance December 31, 2011 (in Swiss Francs) Relevant exchange rates for 2011 and 2010 are as follows: The statement of retained earnings for the year ended December 31, 2010, is as follows (in U.S. dollars): Required: Prepare a translated statement of income and retained earnings, and a translated statement of financial position in U.S. dollars for Werner Technology for 2011.

Complete the following statement by choosing the best response: If the functional currency of a foreign subsidiary is the local currency of the country in which the foreign subsidiary operates, then

The SEC currently requires foreign companies that list shares on U.S. exchanges to provide

Which of the following statements is correct?

Maxim Importing Company. converts its foreign subsidiary financial statements using the translation process. The company's French subsidiary reported the following for 2011: revenues and expenses of 10,500,000 and 6,505,000 francs, respectively, earned or incurred evenly throughout the year, dividends of 500,000 francs were paid during the year. The following exchange rates are available: Translated net income for 2011 is

Heiner Company. converts its foreign subsidiary financial statements using the translation process. The company's subsidiary in the Czech Republic reported the following for 2011: revenues and expenses of 25,000,000 and 18,500,000 koruna, respectively, earned or incurred evenly throughout the year, dividends of 1,500,000 koruna were paid during the year. The following exchange rates are available: Translated net income for 2011 is

Under international accounting standards, cash paid for income taxes (associated with income tax expense) can be shown on the statement of cash flows as an

Under international accounting standards, which of the following methods of inventory costing is not acceptable?

The foreign currency translation adjustments amount is a(n)

Fleming Company. converts its foreign subsidiary financial statements using the translation process. The company's subsidiary in Denmark reported the following for 2011: revenues and expenses of 80,000 and 54,000 kroner, respectively, earned or incurred evenly throughout the year, dividends of 32,000 kroner were paid during the year. The following exchange rates are available: Translated net income for 2011 is

Which of the following statements is correct?

Mankato, Inc., purchased Kyoto Manufacturing Company, a Japanese company, on January 4, 2011. On the date of purchase, the exchange rate for 1 Japanese yen was U.S. $0.007. The balance sheet for Kyoto Manufacturing Co.,on the date of purchase is shown below: Kyoto Manufacturing Co. Balance Sheet January 4, 2011 (in Japanese yen) Required: Prepare a translated balance sheet as of January 4, 2011.

Which of the following is the current group within the International Accounting Standard Board organization that interprets existing standards or provides guidance in areas for which no accounting formal standard exists?

Under international accounting standards, remote contingent liabilities are

Which of the following statements regarding international accounting standards for the impairment of tangible assets is correct?

Under international accounting standards, revenue is recognized

Albright Distributing Inc. converts its foreign subsidiary financial statements using the translation process. Their German subsidiary reported the following for 2011: revenues and expenses of 10,050,000 and 7,800,000 marks, respectively, earned or incurred evenly throughout the year, dividends of 2,000,000 marks were paid during the year. The following exchange rates are available: Translated net income for 2011 is

European Trading Company. converts its foreign subsidiary financial statements using the translation process. The company's Swiss subsidiary reported the following for 2011: revenues and expenses of 14,119,000 and 7,985,000 Swiss francs, respectively, earned or incurred evenly throughout the year, dividends of 2,000,000 Swiss francs were paid during the year. The following exchange rates are available: Translated net income for 2011 is

Which of the following statements is true regarding equity reserves?

Tokyo Enterprises, a subsidiary of Worldwide Enterprises based in Dallas, reported the following information at the end of its first year of operations (all in yen): assets--110,000,000; expenses--41,000,000; liabilities--97,500,000; capital stock--5,500,000; revenues--48,000,000. Relevant exchange rates are as follows: As a result of the translation process, what amount is recorded on the financial statements as the translation adjustment?