Question 1

Which of the following statements is correct?

Accepted Answer

A) If a foreign currency weakens with respect to the Canadian dollar,both self-sustaining and integrated foreign subsidiaries will show a foreign exchange gain. 
B) If a foreign currency weakens with respect to the Canadian dollar,both self-sustaining and integrated foreign subsidiaries will show a foreign exchange loss. 
C) If a foreign currency weakens with respect to the Canadian dollar,a self-sustaining subsidiary will show a foreign exchange gain while an integrated foreign subsidiary will show a foreign exchange loss. 
D) If a foreign currency weakens with respect to the Canadian dollar,a self-sustaining subsidiary will show a foreign exchange loss while an integrated foreign subsidiary will show a foreign exchange gain. 
A) If a foreign currency weakens with respect to the Canadian dollar,both self-sustaining and integrated foreign subsidiaries will show a foreign exchange gain. 
B) If a foreign currency weakens with respect to the Canadian dollar,both self-sustaining and integrated foreign subsidiaries will show a foreign exchange loss. 
C) If a foreign currency weakens with respect to the Canadian dollar,a self-sustaining subsidiary will show a foreign exchange gain while an integrated foreign subsidiary will show a foreign exchange loss. 
D) If a foreign currency weakens with respect to the Canadian dollar,a self-sustaining subsidiary will show a foreign exchange loss while an integrated foreign subsidiary will show a foreign exchange gain.

Question 2

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 common stock?

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 3

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.
-Compute Martin's exchange gain or loss for 2011.

Accepted Answer

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

Question 4

The risk exposure resulting from the translation of foreign currency denominated financial risks 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 5

Under the Temporal Method:

Accepted Answer

A) The relationship of balance sheet items is best preserved. 
B) A single historic rate is used to translate all income statement items. 
C) A net asset exposure is most likely. 
D) Historic rates are used to translate most non-monetary items. 
A) The relationship of balance sheet items is best preserved. 
B) A single historic rate is used to translate all income statement items. 
C) A net asset exposure is most likely. 
D) Historic rates are used to translate most non-monetary items.

Question 6

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.
-Translate Martin's December 31,2011 Balance Sheet into Canadian dollars.

Accepted Answer

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

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.
-Translate Wilsen's December 31,2014 Statement of Retained Earnings.

Accepted Answer

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

Question 8

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 bonds payable?

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 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.
-Which of the following rates would be used to translate the company's plant and equipment?

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 10

Which of the following statements is correct?

Accepted Answer

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

Question 11

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 other expenses?

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 12

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 Cash?

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 13

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 2014 Income Statement.

Accepted Answer

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

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.
-For the sake of simplicity,assume once again that US1's cost of sales was calculated to be $4,000,000 CDN.What is the amount (in Canadian dollars)of US1's retained earnings?

Accepted Answer

A) $665,750 
B) $666,750 
C) $682,500 
D) $667,250 
A) $665,750 
B) $666,750 
C) $682,500 
D) $667,250

Question 15

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 once again that US1's cost of sales was calculated to be $4,000,000 CDN.What is the amount (in Canadian dollars)of US1's net income?

Accepted Answer

A) $414,000 
B) $422,500 
C) $421,000 
D) $440,250 
A) $414,000 
B) $422,500 
C) $421,000 
D) $440,250

Question 16

Under the Current Rate Method:

Accepted Answer

A) Only current balance sheet items excluding shareholders equity are translated using the closing rate in effect at the balance sheet date. 
B) All balance sheet items are translated using the closing rate in effect at the balance sheet date. 
C) All balance sheet items are translated using the average rate in effect throughout the year. 
D) Only non-current balance sheet items are translated using the closing rate in effect at the balance sheet date. 
A) Only current balance sheet items excluding shareholders equity are translated using the closing rate in effect at the balance sheet date. 
B) All balance sheet items are translated using the closing rate in effect at the balance sheet date. 
C) All balance sheet items are translated using the average rate in effect throughout the year. 
D) Only non-current balance sheet items are translated using the closing rate in effect at the balance sheet date.

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 Income Statement items?

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 Retained Earnings at the start of 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 19

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 current liabilities?

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 20

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 2014 Income Statement.

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 translation of foreign currency denominated financial risks is referred to as:

Under the Temporal Method:

Which of the following statements is correct?

Under the Current Rate Method:

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 translation of foreign currency denominated financial risks is referred to as:

Under the Temporal Method:

Which of the following statements is correct?

Under the Current Rate Method:

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