Question 1

Which of the following statements is correct?

Accepted Answer

A) If an organization is self-sustaining,revenues must be translated using closing rates. 
B) If an organization is self-sustaining,revenues must be translated using average rates. 
C) If an organization is self-sustaining,revenues must be translated using historical rates. 
D) If an organization is considered an integrated foreign subsidiary revenues must be translated using average rates. 
A) If an organization is self-sustaining,revenues must be translated using closing rates. 
B) If an organization is self-sustaining,revenues must be translated using average rates. 
C) If an organization is self-sustaining,revenues must be translated using historical rates. 
D) If an organization is considered an integrated foreign subsidiary revenues must be translated using average rates. B

Question 2

The risk exposure resulting from the possible reduction in terms of the domestic reporting foreign currency,of the discounted future cash flows generated from foreign investments or operations due to real changes in exchange rates is referred to as:

Accepted Answer

A) Translation (accounting)exposure. 
B) Transaction exposure. 
C) Economic exposure. 
D) Business risk. 
A) Translation (accounting)exposure. 
B) Transaction exposure. 
C) Economic exposure. 
D) Business risk. C

Question 3

The following information pertains to questions 
ABC Inc has a single wholly-owned American subsidiary called US1 based in Los Angeles,California which was acquired January 1,2014.US1 submitted its financial statements for 2014 to ABC.Selected exchange rates in effect throughout 2014 are shown below:   US1 Financial Results for 2014 were as follows:   Balance Sheet   For questions 17 through 22,inclusively,assume that US1 is considered to be a self-sustaining subsidiary.
-Which of the following rates would be used to translate the company's sales?

Accepted Answer

A) $1CDN=$0.815 U.S. 
B) $1CDN=$0.8175 U.S. 
C) $1CDN=$0.8250 U.S. 
D) $1CDN=$0.83 U.S. 
A) $1CDN=$0.815 U.S. 
B) $1CDN=$0.8175 U.S. 
C) $1CDN=$0.8250 U.S. 
D) $1CDN=$0.83 U.S. C

Question 4

Which of the following statements is correct with respect to the translation of cost of sales in an integrated foreign subsidiary?

Accepted Answer

A) Opening inventory is translated using an average rate. 
B) Opening inventory is translated using closing rates. 
C) Ending inventory is translated using an average rate. 
D) Ending inventory is translated using the rate in effect when the inventory was acquired. 
A) Opening inventory is translated using an average rate. 
B) Opening inventory is translated using closing rates. 
C) Ending inventory is translated using an average rate. 
D) Ending inventory is translated using the rate in effect when the inventory was acquired.

Question 5

Which of the following statements is correct?

Accepted Answer

A) If an organization is self-sustaining,depreciation and amortization must be translated using closing rates. 
B) If an organization is self-sustaining,depreciation and amortization must be translated using average rates. 
C) If an organization is self-sustaining,depreciation and amortization must be translated using historical rates. 
D) If an organization is considered an integrated foreign subsidiary depreciation and amortization must be translated using closing rates. 
A) If an organization is self-sustaining,depreciation and amortization must be translated using closing rates. 
B) If an organization is self-sustaining,depreciation and amortization must be translated using average rates. 
C) If an organization is self-sustaining,depreciation and amortization must be translated using historical rates. 
D) If an organization is considered an integrated foreign subsidiary depreciation and amortization must be translated using closing rates.

Question 6

If the functional currency of the foreign entity is the same as the parent's:

Accepted Answer

A) The foreign entity is classified as integrated. 
B) The foreign entity is classified as self-sustaining. 
C) The foreign entity is classified as a foreign affiliate. 
D) The investment in the foreign entity is classified as a non-monetary asset. 
A) The foreign entity is classified as integrated. 
B) The foreign entity is classified as self-sustaining. 
C) The foreign entity is classified as a foreign affiliate. 
D) The investment in the foreign entity is classified as a non-monetary asset.

Question 7

The following information pertains to questions 
On December 31,2013,Hilman Enterprises of Montreal paid $12,000,000 for 100% of the outstanding shares of Wilsen Corp of the United States.Wilsen's fair values approximated its book values on that date.
Wilsen's comparative balance sheets for 2013 and 2014 are shown below:     Wilsen paid U.S.$100,000 in dividends on September 30,2014.
The inventories on hand at the end of 2014 were purchased when the exchange rate was
$1U.S.= $1.195 CDN.
For questions 42 through 45 inclusively,assume that Wilsen is considered to be an integrated subsidiary.
-Calculate the exchange gain or loss that would result from the translation of Wilsen's Financial Statements.

Accepted Answer

The answer of The following information pertains to questions 
On...

Question 8

Which of the following statements is correct?

Accepted Answer

A) If an organization is self-sustaining,non-monetary items recorded at cost must be translated using historical rates. 
B) If an organization is self-sustaining,non-monetary items recorded at cost must be translated using average rates. 
C) If an organization is self-sustaining,non-monetary items recorded at cost must be translated using closing rates. 
D) If an organization is considered an integrated foreign subsidiary non-monetary items recorded at cost must be translated using closing rates. 
A) If an organization is self-sustaining,non-monetary items recorded at cost must be translated using historical rates. 
B) If an organization is self-sustaining,non-monetary items recorded at cost must be translated using average rates. 
C) If an organization is self-sustaining,non-monetary items recorded at cost must be translated using closing rates. 
D) If an organization is considered an integrated foreign subsidiary non-monetary items recorded at cost must be translated using closing rates.

Question 9

The following information pertains to questions 
ABC Inc has a single wholly-owned American subsidiary called US1 based in Los Angeles,California which was acquired January 1,2014.US1 submitted its financial statements for 2014 to ABC.Selected exchange rates in effect throughout 2014 are shown below:   US1 Financial Results for 2014 were as follows:   Balance Sheet   For questions 17 through 22,inclusively,assume that US1 is considered to be a self-sustaining subsidiary.
-For the sake of simplicity,assume that US1's cost of sales was calculated to be $4,000,000 CDN.What is the amount of the gain or loss arising from translation?

Accepted Answer

A) A $251,285 Gain. 
B) A $3,000 Loss. 
C) A $3,750 Gain. 
D) A $2,750 Loss. 
A) A $251,285 Gain. 
B) A $3,000 Loss. 
C) A $3,750 Gain. 
D) A $2,750 Loss.

Question 10

The following information pertains to questions 
ABC Inc has a single wholly-owned American subsidiary called US1 based in Los Angeles,California which was acquired January 1,2014.US1 submitted its financial statements for 2014 to ABC.Selected exchange rates in effect throughout 2014 are shown below:   US1 Financial Results for 2014 were as follows:   Balance Sheet   For questions 17 through 22,inclusively,assume that US1 is considered to be a self-sustaining subsidiary.
-What is the amount of the gain or loss arising from translation?

Accepted Answer

A) A $750 Loss. 
B) A $5,000 Loss. 
C) A $3,750 Gain. 
D) A $307 Loss. 
A) A $750 Loss. 
B) A $5,000 Loss. 
C) A $3,750 Gain. 
D) A $307 Loss.

Question 11

The following information pertains to questions 
On December 31,2013,Hilman Enterprises of Montreal paid $12,000,000 for 100% of the outstanding shares of Wilsen Corp of the United States.Wilsen's fair values approximated its book values on that date.
Wilsen's comparative balance sheets for 2013 and 2014 are shown below:     Wilsen paid U.S.$100,000 in dividends on September 30,2014.
The inventories on hand at the end of 2014 were purchased when the exchange rate was
$1U.S.= $1.195 CDN.
For questions 42 through 45 inclusively,assume that Wilsen is considered to be an integrated subsidiary.
-Compute Wilsen's exchange gain or loss for 2014.

Accepted Answer

@#IMG-DLM&_TB4094_00

Question 12

Which of the following statements is FALSE?

Accepted Answer

A) If a subsidiary is self-sustaining,the method of valuation of assets and liabilities is of no consequence in the translation because all of the assets are translated at the closing rate. 
B) If a subsidiary is an integrated foreign subsidiary,the method of valuation of assets and liabilities is of no consequence in the translation because all of the assets are translated at the closing rate. 
C) If a subsidiary is an integrated foreign subsidiary,a write-down to market may be required in the translated financial statements. 
D) If a subsidiary is an integrated foreign subsidiary,no write-down is required in the foreign currency financial statements. 
A) If a subsidiary is self-sustaining,the method of valuation of assets and liabilities is of no consequence in the translation because all of the assets are translated at the closing rate. 
B) If a subsidiary is an integrated foreign subsidiary,the method of valuation of assets and liabilities is of no consequence in the translation because all of the assets are translated at the closing rate. 
C) If a subsidiary is an integrated foreign subsidiary,a write-down to market may be required in the translated financial statements. 
D) If a subsidiary is an integrated foreign subsidiary,no write-down is required in the foreign currency financial statements.

Question 13

The following information pertains to questions 
On January 1,2011,Larmer Corp.(a Canadian company)purchased 80% of Martin Inc,an American company,for $50,000 U.S.
Martin's book values approximated its fair values on that date except for plant and equipment,which had a fair market value of $30,000 U.S.with a remaining life expectancy of 5 years.A goodwill impairment loss of $1,000 U.S.occurred during 2011.
Martin's January 1,2011 Balance Sheet is shown below (in U.S.dollars):   Dividends declared and paid December 31,2011
The financial statements of Larmer (in Canadian dollars)and Martin (in U.S.dollars)are shown below:   For questions 50 through 53 inclusively,assume that Martin is an integrated foreign subsidiary.
-Calculate Larmer's Consolidated Net Income for 2011.

Accepted Answer

Calculation of Conso

Question 14

The following information pertains to questions 
ABC Inc has a single wholly-owned American subsidiary called US1 based in Los Angeles,California which was acquired January 1,2014.US1 submitted its financial statements for 2014 to ABC.Selected exchange rates in effect throughout 2014 are shown below:   US1 Financial Results for 2014 were as follows:   Balance Sheet   For questions 17 through 22,inclusively,assume that US1 is considered to be a self-sustaining subsidiary.
-Which of the following rates would be used to translate the company's depreciation expense for the year?

Accepted Answer

A) $1CDN=$0.815 U.S. 
B) $1CDN=$0.8175 U.S. 
C) $1CDN=$0.8250 U.S. 
D) $1CDN=$0.83 U.S. 
A) $1CDN=$0.815 U.S. 
B) $1CDN=$0.8175 U.S. 
C) $1CDN=$0.8250 U.S. 
D) $1CDN=$0.83 U.S.

Question 15

Under the Current Rate Method:

Accepted Answer

A) Transaction exposure is greatest. 
B) The relationship of balance sheet items is best preserved. 
C) Income statement items are translated using a mix of rates. 
D) Income statement items are translated using average rates. 
A) Transaction exposure is greatest. 
B) The relationship of balance sheet items is best preserved. 
C) Income statement items are translated using a mix of rates. 
D) Income statement items are translated using average rates.

Question 16

The risk exposure that occurs between the time of entering into a transaction and the time of settling it is referred to as:

Accepted Answer

A) Translation (accounting)exposure. 
B) Transaction exposure. 
C) Economic exposure. 
D) Business risk. 
A) Translation (accounting)exposure. 
B) Transaction exposure. 
C) Economic exposure. 
D) Business risk.

Question 17

The following information pertains to questions 
ABC Inc has a single wholly-owned American subsidiary called US1 based in Los Angeles,California which was acquired January 1,2014.US1 submitted its financial statements for 2014 to ABC.Selected exchange rates in effect throughout 2014 are shown below:   US1 Financial Results for 2014 were as follows:   Balance Sheet   For questions 17 through 22,inclusively,assume that US1 is considered to be a self-sustaining subsidiary.
-Which of the following rates would be used to translate the company's bond interest expense for the year?

Accepted Answer

A) $1CDN=$0.815 U.S. 
B) $1CDN=$0.8175 U.S. 
C) $1CDN=$0.8250 U.S. 
D) $1CDN=$0.83 U.S. 
A) $1CDN=$0.815 U.S. 
B) $1CDN=$0.8175 U.S. 
C) $1CDN=$0.8250 U.S. 
D) $1CDN=$0.83 U.S.

Question 18

The following information pertains to questions 
ABC Inc has a single wholly-owned American subsidiary called US1 based in Los Angeles,California which was acquired January 1,2014.US1 submitted its financial statements for 2014 to ABC.Selected exchange rates in effect throughout 2014 are shown below:   US1 Financial Results for 2014 were as follows:   Balance Sheet   For questions 17 through 22,inclusively,assume that US1 is considered to be a self-sustaining subsidiary.
-Which of the following rates would be used to translate the company's dividends?

Accepted Answer

A) $1CDN=$0.815 U.S. 
B) $1CDN=$0.8125 U.S. 
C) $1CDN=$0.8250 U.S. 
D) $1CDN=$0.83 U.S. 
A) $1CDN=$0.815 U.S. 
B) $1CDN=$0.8125 U.S. 
C) $1CDN=$0.8250 U.S. 
D) $1CDN=$0.83 U.S.

Question 19

The following information pertains to questions 
On December 31,2013,Hilman Enterprises of Montreal paid $12,000,000 for 100% of the outstanding shares of Wilsen Corp of the United States.Wilsen's fair values approximated its book values on that date.
Wilsen's comparative balance sheets for 2013 and 2014 are shown below:     Wilsen paid U.S.$100,000 in dividends on September 30,2014.
The inventories on hand at the end of 2014 were purchased when the exchange rate was
$1U.S.= $1.195 CDN.
For questions 42 through 45 inclusively,assume that Wilsen is considered to be an integrated subsidiary.
-Translate Wilsen's December 31,2014 Balance Sheet.

Accepted Answer

The answer of The following information pertains to questions 
On...

Question 20

The following information pertains to questions 
On January 1,2011,Larmer Corp.(a Canadian company)purchased 80% of Martin Inc,an American company,for $50,000 U.S.
Martin's book values approximated its fair values on that date except for plant and equipment,which had a fair market value of $30,000 U.S.with a remaining life expectancy of 5 years.A goodwill impairment loss of $1,000 U.S.occurred during 2011.
Martin's January 1,2011 Balance Sheet is shown below (in U.S.dollars):   Dividends declared and paid December 31,2011
The financial statements of Larmer (in Canadian dollars)and Martin (in U.S.dollars)are shown below:   For questions 50 through 53 inclusively,assume that Martin is an integrated foreign subsidiary.
-Prepare Larmer's December 31,2011 Consolidated Balance Sheet.

Accepted Answer

The answer of The following information pertains to questions 
On...

Which of the following statements is correct?

The risk exposure resulting from the possible reduction in terms of the domestic reporting foreign currency,of the discounted future cash flows generated from foreign investments or operations due to real changes in exchange rates is referred to as:

Which of the following statements is correct with respect to the translation of cost of sales in an integrated foreign subsidiary?

Which of the following statements is correct?

If the functional currency of the foreign entity is the same as the parent's:

Which of the following statements is correct?

Which of the following statements is FALSE?

Under the Current Rate Method:

The risk exposure that occurs between the time of entering into a transaction and the time of settling it is referred to as:

A Survey of International Accounting

Investments in Equity Securities

Business Combinations

Consolidated Statements on Date of Acquisition

Consolidation Subsequent to Acquisition Date

Intercompany Inventory and Land Profits

Aintercompany Profits in Depreciable Assets

Consolidated Cash Flows and Ownership Issues

Other Consolidated Reporting Issues

Foreign Currency Transactions

Accounting for Not-For-Profit Organizations and Governments

Filters

Exam 11: Translation and Consolidation of the Financial Statements of Foreign Operations

Which of the following statements is correct?

The risk exposure resulting from the possible reduction in terms of the domestic reporting foreign currency,of the discounted future cash flows generated from foreign investments or operations due to real changes in exchange rates is referred to as:

Which of the following statements is correct with respect to the translation of cost of sales in an integrated foreign subsidiary?

Which of the following statements is correct?

If the functional currency of the foreign entity is the same as the parent's:

Which of the following statements is correct?

Which of the following statements is FALSE?

Under the Current Rate Method:

The risk exposure that occurs between the time of entering into a transaction and the time of settling it is referred to as:

A Survey of International Accounting

Investments in Equity Securities

Business Combinations

Consolidated Statements on Date of Acquisition

Consolidation Subsequent to Acquisition Date

Intercompany Inventory and Land Profits

Aintercompany Profits in Depreciable Assets

Consolidated Cash Flows and Ownership Issues

Other Consolidated Reporting Issues

Foreign Currency Transactions

Accounting for Not-For-Profit Organizations and Governments

Filters