Question 1

Which of the following statements is correct?

Accepted Answer

A)  If an organization is self-sustaining (i.e., the functional currency of the foreign operation is different than the parent), dividends must be translated using closing rates. 
B)  If an organization is self-sustaining (i.e., the functional currency of the foreign operation is different than the parent), dividends must be translated using average rates. 
C)  If an organization is self-sustaining (i.e., the functional currency of the foreign operation is different than the parent), dividends must be translated using historical rates. 
D) If an organization is considered an integrated foreign subsidiary (i.e., the functional currency of the foreign operation is the same as the parent), dividends must be translated using average rates. 
A)  If an organization is self-sustaining (i.e., the functional currency of the foreign operation is different than the parent), dividends must be translated using closing rates. 
B)  If an organization is self-sustaining (i.e., the functional currency of the foreign operation is different than the parent), dividends must be translated using average rates. 
C)  If an organization is self-sustaining (i.e., the functional currency of the foreign operation is different than the parent), dividends must be translated using historical rates. 
D) If an organization is considered an integrated foreign subsidiary (i.e., the functional currency of the foreign operation is the same as the parent), dividends must be translated using average rates.

Question 2

Translate Wilsen's 2014 Income Statement if Wilsen is considered to be an integrated subsidiary (i.e., the functional currency of the foreign operation is the same as the parent).

Accepted Answer

\[\begin{array} { | l | l | l | l | } 
\

Question 3

If there were no additions or disposals of plant and equipment in 2017, which of the following rates would be used to translate the company's plant and equipment?

Accepted Answer

A)  US$1 = CDN$0.815 
B)  US$1 = CDN$0.8175 
C)  US$1 = CDN$0.825 
D) US$1 = CDN$0.83 
A)  US$1 = CDN$0.815 
B)  US$1 = CDN$0.8175 
C)  US$1 = CDN$0.825 
D) US$1 = CDN$0.83

Question 4

Which of the following rates would be used to translate the company's dividends?

Accepted Answer

A)  US$1 = CDN$0.815 
B)  US$1 = CDN$0.8125 
C)  US$1 = CDN$0.825 
D) US$1 = CDN$0.83 
A)  US$1 = CDN$0.815 
B)  US$1 = CDN$0.8125 
C)  US$1 = CDN$0.825 
D) US$1 = CDN$0.83

Question 5

Which of the following rates would be used to translate the company's Retained Earnings at the start of the year?

Accepted Answer

A)  US$1 = CDN$0.815 
B)  US$1 = CDN$0.8175 
C)  US$1 = CDN$0.825 
D) US$1 = CDN$0.83 
A)  US$1 = CDN$0.815 
B)  US$1 = CDN$0.8175 
C)  US$1 = CDN$0.825 
D) US$1 = CDN$0.83

Question 6

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 7

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 8

Which of the following rates would be used to translate the company's Dividends paid during the year?

Accepted Answer

A)  US$1 = CDN$0.815 
B)  US$1 = CDN$0.8125 
C)  US$1 = CDN$0.825 
D) US$1 = CDN$0.83 
A)  US$1 = CDN$0.815 
B)  US$1 = CDN$0.8125 
C)  US$1 = CDN$0.825 
D) US$1 = CDN$0.83

Question 9

If the company had no capital asset additions or disposals in 2017, which of the following rates would be used to translate the company's depreciation expense for the year?

Accepted Answer

A)  US$1 = CDN$0.815 
B)  US$1 = CDN$0.8175 
C)  US$1 = CDN$0.825 
D) US$1 = CDN$0.83 
A)  US$1 = CDN$0.815 
B)  US$1 = CDN$0.8175 
C)  US$1 = CDN$0.825 
D) US$1 = CDN$0.83

Question 10

If Maker is considered to be an integrated foreign subsidiary (i.e., the functional currency of the foreign operation is the same as the parent), what amount will be shown for capital assets (net) on its translated Canadian dollar financial statements as at December 31, 2016?

Accepted Answer

A)  $168,000. 
B)  $169,600. 
C)  $170,000. 
D) $170,400. 
A)  $168,000. 
B)  $169,600. 
C)  $170,000. 
D) $170,400.

Question 11

Which of the following rates would be used to translate the company's inventory?

Accepted Answer

A)  US$1 = CDN$0.815 
B)  US$1 = CDN$0.8175 
C)  US$1 = CDN$0.825 
D) US$1 = CDN$0.83 
A)  US$1 = CDN$0.815 
B)  US$1 = CDN$0.8175 
C)  US$1 = CDN$0.825 
D) US$1 = CDN$0.83

Question 12

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 13

Which of the following statements is correct with respect to the translation of cost of sales in an integrated foreign subsidiary (i.e., the functional currency of the foreign operation is the same as the parent)?

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 14

Which of the following rates would be used to translate the company's Common Shares?

Accepted Answer

A)  US$1 = CDN$0.815 
B)  US$1 = CDN$0.8175 
C)  US$1 = CDN$0.825 
D) US$1 = CDN$0.83 
A)  US$1 = CDN$0.815 
B)  US$1 = CDN$0.8175 
C)  US$1 = CDN$0.825 
D) US$1 = CDN$0.83

Question 15

According to IAS 29 Financial Reporting in Hyperinflationary Economies, the term "hyper-inflationary" means:

Accepted Answer

A)  an annual inflation rate of 50%. 
B)  an annual inflation rate of 100%. 
C)  a cumulative inflation rate of 100% over a 3-5 year period. 
D) it does not establish an absolute rate which is deemed to be hyper-inflation. 
A)  an annual inflation rate of 50%. 
B)  an annual inflation rate of 100%. 
C)  a cumulative inflation rate of 100% over a 3-5 year period. 
D) it does not establish an absolute rate which is deemed to be hyper-inflation.

Question 16

If Maker is considered to be a self-sustaining foreign subsidiary (i.e., the functional currency of the foreign operation is different than the parent), what amount will be shown for capital assets (net) on its translated Canadian dollar financial statements as at December 31, 2017?

Accepted Answer

A)  $212,500. 
B)  $224,430. 
C)  $225,830. 
D) $228,438. 
A)  $212,500. 
B)  $224,430. 
C)  $225,830. 
D) $228,438.

Question 17

A foreign subsidiary is considered to be an integrated foreign operation (i.e., the functional currency of the foreign operation is the same as the parent), and its income is earned evenly over the year. It paid its income taxes for the year in two instalments, half on June 30 and half on December 31. What rate(s) should be used to translate the company's income tax expense into Canadian dollars when preparing translated financial statements for the year?

Accepted Answer

A)  Half at the rate at June 30 and half at the rate at December 31. 
B)  All at the average rate for the year. 
C)  All at the closing rate for the year. 
D) All at the opening rate for the year. 
A)  Half at the rate at June 30 and half at the rate at December 31. 
B)  All at the average rate for the year. 
C)  All at the closing rate for the year. 
D) All at the opening rate for the year.

Question 18

Translate Wilsen's December 31, 2017 Balance Sheet if Wilsen was considered to be a self-sustaining foreign operation (i.e., the functional currency of the foreign operation is different than the parent).

Accepted Answer

Balance Sheet as at
December 31, 2017
 \

Question 19

On January 1, 2017, Larmer Corp. (a Canadian company) purchased 80% of Martin Inc, an American company, for US$50,000.
Martin's book values approximated its fair values on that date except for plant and equipment, which had a fair value of US$30,000 with a remaining life expectancy of 5 years. A goodwill impairment loss of US$1,000 occurred during 2017. Martin's January 1, 2017 Balance Sheet is shown below (in U.S. dollars): $$\begin{array} { | l | l | } 
\hline \text { Current Monetary Assets } & \$ 50,000 \
\hline \text { muentory } & \$ 40,000 \
\hline \text { Plant and Equipment } & \$ 25,000 \
\hline \text { Total Assets } & \$ 115,000 \
\hline & \
\hline \text { Current Liabilities } &  \$ 45,000 \
\hline \text { Bonds Pay able (maturity: January 1, 2022) } &\$ 20,000\
\hline \text { Common Shares } & 30,000\
\hline \text { Retained Earnings } &   \$ 20,000\
\hline \text { Total Labilities and Equity } &\$ 115,000 \
\hline & \
\hline
\end{array}$$ The following exchange rates were in effect during 2017:
 $$\begin{array} { | l | l | } 
\hline \text { January } 1,2017 : &U S \$ 1 = C D N \$ 1.3260 \
\hline \text { Average for } 2017 : & US \$ 1 = C D N \$ 1.3360 \
\hline \text { Date when Inventory Purchased: } & U S \$ 1 = \text { CDN } \$ 1.34 \
\hline \text { December } 31,2017 : & US \$ 1 = \text { CDN } \$ 1.35 \
\hline & \
\hline
\end{array}$$ Dividends declared and paid December 31, 2017.
The financial statements of Larmer (in Canadian dollars) and Martin (in U.S. dollars) are shown below:
Balance Sheets
  
-Compute Martin's exchange gain or loss for 2017 if Martin is considered to be an integrated foreign subsidiary (i.e., the functional currency of the foreign operation is the same as the parent).

Accepted Answer

Current monetary position
 \[\begin{arra

Question 20

Translate Wilsen's December 31, 2017 Balance Sheet if Wilsen is considered to be an integrated foreign operation (i.e., the functional currency of the foreign operation is the same as the parent).

Accepted Answer

Balance Sheet as at
December 31, 2017
 \

Which of the following statements is correct?

Translate Wilsen's 2014 Income Statement if Wilsen is considered to be an integrated subsidiary (i.e., the functional currency of the foreign operation is the same as the parent).

If there were no additions or disposals of plant and equipment in 2017, which of the following rates would be used to translate the company's plant and equipment?

Which of the following rates would be used to translate the company's dividends?

Which of the following rates would be used to translate the company's Retained Earnings at the start of the year?

Which of the following statements is FALSE?

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

Which of the following rates would be used to translate the company's Dividends paid during the year?

If the company had no capital asset additions or disposals in 2017, which of the following rates would be used to translate the company's depreciation expense for the year?

If Maker is considered to be an integrated foreign subsidiary (i.e., the functional currency of the foreign operation is the same as the parent), what amount will be shown for capital assets (net) on its translated Canadian dollar financial statements as at December 31, 2016?

Which of the following rates would be used to translate the company's inventory?

Which of the following statements is correct?

Which of the following statements is correct with respect to the translation of cost of sales in an integrated foreign subsidiary (i.e., the functional currency of the foreign operation is the same as the parent)?

Which of the following rates would be used to translate the company's Common Shares?

According to IAS 29 Financial Reporting in Hyperinflationary Economies, the term "hyper-inflationary" means:

If Maker is considered to be a self-sustaining foreign subsidiary (i.e., the functional currency of the foreign operation is different than the parent), what amount will be shown for capital assets (net) on its translated Canadian dollar financial statements as at December 31, 2017?

Translate Wilsen's December 31, 2017 Balance Sheet if Wilsen was considered to be a self-sustaining foreign operation (i.e., the functional currency of the foreign operation is different than the parent).

Translate Wilsen's December 31, 2017 Balance Sheet if Wilsen is considered to be an integrated foreign operation (i.e., the functional currency of the foreign operation is the same as the parent).

Conceptual and Case Analysis Frameworks for Financial Reporting

Investments in Equity Securities

Business Combinations

Consolidation of Non-Wholly Owned Subsidiaries

Consolidation Subsequent to Acquisition Date

Intercompany Inventory and Land Profits

A Intercompany Profits in Depreciable Assets B Intercompany Bondholdings

Consolidated Cash Flows and Changes in Ownership

Other Consolidation Reporting Issues

Foreign Currency Transactions

Accounting for Not-For-Profit and Public Sector Organizations

Filters

Exam 11: Translation and Consolidation of Foreign Operations

Which of the following statements is correct?

Translate Wilsen's 2014 Income Statement if Wilsen is considered to be an integrated subsidiary (i.e., the functional currency of the foreign operation is the same as the parent).

If there were no additions or disposals of plant and equipment in 2017, which of the following rates would be used to translate the company's plant and equipment?

Which of the following rates would be used to translate the company's dividends?

Which of the following rates would be used to translate the company's Retained Earnings at the start of the year?

Which of the following statements is FALSE?

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

Which of the following rates would be used to translate the company's Dividends paid during the year?

If the company had no capital asset additions or disposals in 2017, which of the following rates would be used to translate the company's depreciation expense for the year?

If Maker is considered to be an integrated foreign subsidiary (i.e., the functional currency of the foreign operation is the same as the parent), what amount will be shown for capital assets (net) on its translated Canadian dollar financial statements as at December 31, 2016?

Which of the following rates would be used to translate the company's inventory?

Which of the following statements is correct?

Which of the following statements is correct with respect to the translation of cost of sales in an integrated foreign subsidiary (i.e., the functional currency of the foreign operation is the same as the parent)?

Which of the following rates would be used to translate the company's Common Shares?

According to IAS 29 Financial Reporting in Hyperinflationary Economies, the term "hyper-inflationary" means:

If Maker is considered to be a self-sustaining foreign subsidiary (i.e., the functional currency of the foreign operation is different than the parent), what amount will be shown for capital assets (net) on its translated Canadian dollar financial statements as at December 31, 2017?

Translate Wilsen's December 31, 2017 Balance Sheet if Wilsen was considered to be a self-sustaining foreign operation (i.e., the functional currency of the foreign operation is different than the parent).

Translate Wilsen's December 31, 2017 Balance Sheet if Wilsen is considered to be an integrated foreign operation (i.e., the functional currency of the foreign operation is the same as the parent).

Conceptual and Case Analysis Frameworks for Financial Reporting

Investments in Equity Securities

Business Combinations

Consolidation of Non-Wholly Owned Subsidiaries

Consolidation Subsequent to Acquisition Date

Intercompany Inventory and Land Profits

A Intercompany Profits in Depreciable Assets B Intercompany Bondholdings

Consolidated Cash Flows and Changes in Ownership

Other Consolidation Reporting Issues

Foreign Currency Transactions

Accounting for Not-For-Profit and Public Sector Organizations

Filters