Exam 9: Reporting Foreign Operations

Under the temporal method,at what exchange rate is amortization expense translated?

Under the current-rate method,at what exchange rate is amortization expense translated?

Under the temporal method,which of the following items would be translated using the year-end spot rate?

For private enterprises that use the current-rate method,how does reporting under Accounting Standards for Private Enterprises (ASPE)differ from reporting under IFRS?

Liverpool Company operates retail stores in Canada and an exporting business in London that specializes in buying and selling British tweeds.The London subsidiary provided the following financial statements in pounds sterling to the Canadian parent company. Liverpool Company was incorporated on January 1,1984,at which time an amount of property,plant,and equipment with a present (December 31,20X5)Net Book Value of £3,000,000 was purchased.Additional equipment was purchased December 31,20X4 (20% of depreciation expense relates to this new equipment).The long-term notes were issued,to replace financing provided by the parent,on January 1,20X4. Direct exchange rates for the pound sterling (1 $C/£ )are: The January 1,20X5 retained earnings balance of the London Branch of the Liverpool Company correctly translated to Canadian dollars was $1,783,774.The beginning inventory of £380,000 was acquired during the last quarter of 20X4 and the ending inventory was acquired during the last quarter of 20X5.Sales and purchases were made,and other expenses were incurred,evenly throughout the year. Required: Translate the December 31,20X5 statement of financial position of Liverpool Company into dollars assuming that the temporal method is appropriate.

Cho Co. ,a public Canadian corporation has a subsidiary in South Africa that supplies half of the components that Cho needs for its plant in Alberta.It has been determined that the functional currency of the foreign operations is the Canadian dollar.Which of the following statements is true?

Under the temporal method,which of the following items would be translated using the historical rate?

Water Bottling Inc.(WBI)is a 100% wholly owned subsidiary with operations in France.WBI was purchased by a Canadian parent on January 1,20X5.The financial records of WBI are maintained in euros and provide the following information with respect to equipment,intangibles and goodwill. Equipment - purchased on January 1,20X5 for €250,000 - depreciated over 5 years on a straight-line basis. Equipment - purchased on January 1,20X6 for €175,000 - depreciated over 5 years on a straight-line basis. Required: Assume that WBC's functional currency is the Canadian dollar.Calculate the translated Canadian dollar balances for the following accounts for December 31,20X7 a.Equipment b.Accumulated depreciation - equipment c.Depreciation expense

For publicly-accountable companies,with foreign operations in countries with a hyper-inflationary economy,what should be done prior to translation?

Which of the following statements about the temporal method is true?

For consolidation purposes,what exchange rate is used for converting the retained earnings of a foreign subsidiary into Canadian dollars under the current rate method?

Which of the following is an indication that a parent company and a foreign subsidiary are integrated?

LaSalle Ltd. ,a Canadian company has a subsidiary in Brazil that produces a component used in LaSalle's manufacturing.All of the components that the subsidiary produces is sold to LaSalle.The subsidiary also purchases most of the raw materials used in its production from LaSalle.Both companies use the Canadian dollar as its functional currency.Which of the following statements is true?

All of the following statements are stated in Brazil reals (R$) Additional information: Selected exchange rates: Date of purchase of inventory on hand at year-end R$1 = $.05688 Dividends were declared on June 30,20X5 Opening inventory = R$130,000 Inventory purchases for the year = R$1,570,000 Machinery,land,and buildings were purchased on June 30,20X4 Bralta is the Brazilian subsidiary of Altapro Co. ,a Canadian company.Under the current-rate method,what is the net income?

ISP has a wholly owned subsidiary in China.This subsidiary is self-sufficient and does not rely on ISP for financing and sales.How should foreign exchange gains on translation of the subsidiary's statements to Canadian dollars be reported on ISP's consolidated financial statements?

All of the following statements are stated in Brazil reals (R$) Additional information: Selected exchange rates: Date of purchase of inventory on hand at year-end R$1 = $.05688 Dividends were declared on June 30,20X5 Opening inventory = R$130,000 Inventory purchases for the year = R$1,570,000 Machinery,land,and buildings were purchased on June 30,20X4 Bralta is the Brazilian subsidiary of Altapro Co. ,a Canadian company.Bralta's net monetary position at June 30,20X4 was R$2,030,000.What is the accumulated translation gain (loss)under the temporal method?

Which of the following statements about non-monetary assets is true?

What gives rise to accounting exposure to changes in the foreign exchange rate?

Under the temporal method,how is an exchange gain arising from the long-term debt of a foreign subsidiary,accounted for?

Liverpool Company operates retail stores in Canada and an exporting business in London that specializes in buying and selling British tweeds.The London subsidiary provided the following financial statements in pounds sterling to the Canadian parent company. Liverpool Company was incorporated on January 1,1984,at which time an amount of property,plant,and equipment with a present (December 31,20X5)Net Book Value of £3,000,000 was purchased.Additional equipment was purchased December 31,20X4 (20% of depreciation expense relates to this new equipment).The long-term notes were issued,to replace financing provided by the parent,on January 1,20X4. Direct exchange rates for the pound sterling (1 $C/£ )are: The January 1,20X5 retained earnings balance of the London Branch of the Liverpool Company correctly translated to Canadian dollars was $1,783,774.The beginning inventory of £380,000 was acquired during the last quarter of 20X4 and the ending inventory was acquired during the last quarter of 20X5.Sales and purchases were made,and other expenses were incurred,evenly throughout the year. Required: Translate the statement of comprehensive income and statement of changes in equity - partial - retained earnings section of Liverpool Company for the year ending December 31,20X5 into dollars,assuming that the temporal method is appropriate.