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

Question 1

Which of the following statements is correct?

A)If an organization is self-sustaining,monetary items must be translated using closing rates.
B)If an organization is self-sustaining,monetary items must be translated using average rates.
C)If an organization is self-sustaining,monetary items 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 average rates.

Answer 1

A

Question 2

For a self-sustaining foreign operation,exchange gains and losses are to be included in or along with:

A)Other comprehensive income.
B)An exchange account.
C)Non-Controlling interest.
D)The acquisition differential amortization.

Answer 2

A

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 Income Statement items?

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

Answer 3

C

Question 4

Under the Current Rate Method:

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 5

Which of the following statements is correct?

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

Question 6

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 paid during the year?

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 7

Which of the following statements is correct?

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 8

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

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 9

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

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 10

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:

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

Question 11

Which of the following statements is correct?

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.

Question 12

Under the Temporal Method:

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 13

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?

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 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 assets and liabilities?

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

Which of the following statements is correct?

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 16

Which of the following statements is correct?

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

Question 17

The risk exposure resulting from the translation of foreign currency denominated financial risks is referred to as:

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

Question 18

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

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

Question 19

Under the Current Rate Method:

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 20

Which of the following statements is correct?

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 21

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?

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

Question 22

Which of the following statements is correct?

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 23

Which of the following statements is FALSE?

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 24

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?

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 25

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?

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 26

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?

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 27

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 accounts receivable?

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 28

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?

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 29

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?

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

Question 30

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 inventory?

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 31

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?

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 32

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?

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

Question 33

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?

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 34

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?

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 35

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?

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 36

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?

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

Question 37

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 beginning retained earnings?

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 38

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?

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 39

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?

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 40

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?

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 41

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.

Question 42

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.

Question 43

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.

Question 44

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 2011 Income Statement into Canadian dollars.

Question 45

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.

Question 46

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.

Question 47

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.

Question 48

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.

Question 49

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.

Question 50

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.

Question 51

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.

Question 52

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.

Question 53

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.

Question 54

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.

Question 55

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.

Question 56

According to IAS 29,the term "hyper- inflationary" means:

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 a rate which is deemed to be hyper-inflation.