Question 1

Which of the following rates would be used to translate the company's income statement items?

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 2

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
  
-Translate Martin's 2017 Income Statement into Canadian dollars 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

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Question 3

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), non-monetary items recorded at closing values 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), non-monetary items recorded at closing values 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), non-monetary items recorded at closing values 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), non-monetary items recorded at closing values 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), non-monetary items recorded at closing values 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), non-monetary items recorded at closing values 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), non-monetary items recorded at closing values 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), non-monetary items recorded at closing values must be translated using average rates.

Question 4

Calculate the exchange gain or loss that would result from the translation of Wilsen's Financial Statements 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

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Question 5

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

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

Which of the following rates would be used to translate the company's income statement items?

Which of the following statements is correct?

Calculate the exchange gain or loss that would result from the translation of Wilsen's Financial Statements 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).

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

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 rates would be used to translate the company's income statement items?

Which of the following statements is correct?

Calculate the exchange gain or loss that would result from the translation of Wilsen's Financial Statements 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).

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

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