Exam 10: Foreign Currency Transactions and Translation

Assume that Lewis International sells running shoes to a British importer on June 1 and that the sale is denominated at £75,000 and will be collected on July 15. Assume the treatment of FASB Statement 52 and that no forward contract is entered into. Also assume that Lewis closes its books at the end of each month. The following are the relevant exchange rates. Spot rate on June 1 \ 1.6200 Forward rate for July 15 delivery \ 1.6000 Spot rate on June 30 \ 1.6100 Spot rate on July 15 \ 1.5950 -Assuming the tax treatment for foreign currency transactions, what is the foreign exchange gain or loss on July 15?

The translation method in which current assets and liabilities are translated at current exchange rates and other assets, liabilities and owner's equity are translated at historical exchange rates is known as the

Assume that Lewis International sells running shoes to a British importer on June 1 and that the sale is denominated at £75,000 and will be collected on July 15. Assume the treatment of FASB Statement 52 and that no forward contract is entered into. Also assume that Lewis closes its books at the end of each month. The following are the relevant exchange rates. Spot rate on June 1 \ 1.6200 Forward rate for July 15 delivery \ 1.6000 Spot rate on June 30 \ 1.6100 Spot rate on July 15 \ 1.5950 -What is the amount of the foreign exchange gain or loss that it will recognize on July 15?

Options are the right but not the obligation to trade foreign currency in the future.

The translation methodology which assumes that the only assets that should be translated at the historical rate are those carried at past exchange prices is the

The exchange rate which is a contract rate between the company and the foreign exchange trader at the bank for delivery in the future is the

According to the current-rate method of translating financial statements,

The temporal method of translating financial statements is used when

The translation method which uses as the basis for its logic that financial assets and liabilities have similar attributes and should be translated at the same exchange rate is the

The current-rate method of translating financial statements is used when

According to FASB Statement No. 8,

The currency in which the parent company prepares its financial statements is the

The spot rate is

According to the current rate method of translation,

The current rate method would most likely have a translation adjustment.

Assume that Lewis International sells running shoes to a British importer on June 1 and that the sale is denominated at £75,000 and will be collected on July 15. Assume the treatment of FASB Statement 52 and that no forward contract is entered into. Also assume that Lewis closes its books at the end of each month. The following are the relevant exchange rates. Spot rate on June 1 \ 1.6200 Forward rate for July 15 delivery \ 1.6000 Spot rate on June 30 \ 1.6100 Spot rate on July 15 \ 1.5950 -Assuming the tax treatment for foreign currency transactions, what is the foreign exchange gain or loss on June 30?

The local currency and the reporting currency are always the same.

The functional currency is

If the functional currency of a foreign subsidiary is the currency of the country where the subsidiary is located, the translation method that should be selected is the

The currency of the primary economic environment in which the firm operates is the