International Accounting Final Exam
Questions and Answers 100% Solved
B. Converting financial statements of a foreign currency into a domestic
currency - ✔✔What is meant by the "translation" of foreign currency
financial statements?
C. Current rate and historical rate - ✔✔Companies must choose between
which exchange rates for consolidating foreign subsidiaries?
A. Current rate method - ✔✔When the parent company of a foreign
subsidiary believes that all of its investment in the subsidiary is exposed to
foreign exchange risk, what method of translation should be used in
consolidating the financial statements?
C. It is realized when the foreign operation is sold at book value and the
proceeds are converted into parent company currency. - ✔✔When would
the balance sheet exposure arising from the current rate method become
realized?
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,A. The historic/non-historic method - ✔✔Which of the following is NOT
among the four methods which have been used to translate foreign
currency financial statements globally?
C. accounts receivable. - ✔✔Nonmonetary assets DO NOT include:
B. Monetary assets are those assets whose values do not fluctuate over
time. - ✔✔Which of the following is true of monetary assets?
C. Translation exposure - ✔✔What is another term for "balance sheet
exposure?"
D. All accounts translated at current exchange rates - ✔✔Which of the
following items in the balance sheet is subject to accounting exposure?
C. When there is net liability exposure, the translation adjustment will be
positive. - ✔✔Excellent Inc. is located in the U.S., but it has subsidiaries in
Japan. When the yen depreciates relative to the U.S. dollar, what is the
direction of the translation adjustment to consolidate Excellent's financial
statements?
D. Temporal method - ✔✔Which of the following methods for translating
foreign currency financial statements attempts to produce consolidated
financial statements as if a foreign subsidiary had actually used the parent
company's currency for all its transactions?
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,C. Temporal method - ✔✔Of the following methods for translating foreign
currency financial statements, which one maintains the underlying valuation
method (i.e. historical cost or current value) used by the foreign subsidiary?
B. Current rate - ✔✔Essco Ltd, a foreign subsidiary of Peako Corp., has
written down its inventory to current market value under a "lower of cost or
market" rule. When consolidating Essco's balance sheet into Peako's
balance sheet using the current rate method, what exchange rate should
be used for the inventory under the temporal method?
B. Historical rate - ✔✔What exchange rate should be used to translate the
common stock of Essco Ltd, a foreign subsidiary of Peako Corp., when
consolidating the financial statements using the current rate method?
C. Historical rate - ✔✔Under the temporal method of consolidating foreign
currency financial statements, what exchange rate should be used for
translating the depreciation expense recorded by a subsidiary?
B. The U.S. parent would have had to pay $13,200,000 to acquire the
building in 2010. - ✔✔A Danish subsidiary of a U.S. corporation recorded a
building it purchased in 2010 for 100,000,000 krone, when the exchange
rate was $0.132/krone. The current exchange rate is $0.163/krone. Under
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, the temporal method, how should the translated amount of the restated
asset be interpreted?
D. None of the above - ✔✔A Danish subsidiary of a U.S. corporation
recorded a building it purchased in 2010 for 100,000,000 krone, when the
exchange rate was $0.132/krone. The current exchange rate is
$0.163/krone. Under the current rate method, how should the translated
amount of the restated asset be interpreted?
D. None of the above - ✔✔Which of the following methods uses the current
exchange rate to consolidate all accounts of a foreign subsidiary into the
financial statements of its parent?
C. It is equal to the foreign operation's net asset position. - ✔✔Under the
current rate method of translating foreign currency financial statements,
what is the amount of the balance sheet exposure?
B. Historical rate - ✔✔Under both the temporal method and the current rate
method, what exchange rate should be used to translate a foreign
subsidiary's dividends into parent company currency?
B. Average rate during the year - ✔✔Under the current rate method of
translating foreign currency financial statements, what exchange rate
should be used for cost of goods sold?
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Questions and Answers 100% Solved
B. Converting financial statements of a foreign currency into a domestic
currency - ✔✔What is meant by the "translation" of foreign currency
financial statements?
C. Current rate and historical rate - ✔✔Companies must choose between
which exchange rates for consolidating foreign subsidiaries?
A. Current rate method - ✔✔When the parent company of a foreign
subsidiary believes that all of its investment in the subsidiary is exposed to
foreign exchange risk, what method of translation should be used in
consolidating the financial statements?
C. It is realized when the foreign operation is sold at book value and the
proceeds are converted into parent company currency. - ✔✔When would
the balance sheet exposure arising from the current rate method become
realized?
1
©JOSHCLAY 2024/2025. YEAR PUBLISHED 2024.
,A. The historic/non-historic method - ✔✔Which of the following is NOT
among the four methods which have been used to translate foreign
currency financial statements globally?
C. accounts receivable. - ✔✔Nonmonetary assets DO NOT include:
B. Monetary assets are those assets whose values do not fluctuate over
time. - ✔✔Which of the following is true of monetary assets?
C. Translation exposure - ✔✔What is another term for "balance sheet
exposure?"
D. All accounts translated at current exchange rates - ✔✔Which of the
following items in the balance sheet is subject to accounting exposure?
C. When there is net liability exposure, the translation adjustment will be
positive. - ✔✔Excellent Inc. is located in the U.S., but it has subsidiaries in
Japan. When the yen depreciates relative to the U.S. dollar, what is the
direction of the translation adjustment to consolidate Excellent's financial
statements?
D. Temporal method - ✔✔Which of the following methods for translating
foreign currency financial statements attempts to produce consolidated
financial statements as if a foreign subsidiary had actually used the parent
company's currency for all its transactions?
2
©JOSHCLAY 2024/2025. YEAR PUBLISHED 2024.
,C. Temporal method - ✔✔Of the following methods for translating foreign
currency financial statements, which one maintains the underlying valuation
method (i.e. historical cost or current value) used by the foreign subsidiary?
B. Current rate - ✔✔Essco Ltd, a foreign subsidiary of Peako Corp., has
written down its inventory to current market value under a "lower of cost or
market" rule. When consolidating Essco's balance sheet into Peako's
balance sheet using the current rate method, what exchange rate should
be used for the inventory under the temporal method?
B. Historical rate - ✔✔What exchange rate should be used to translate the
common stock of Essco Ltd, a foreign subsidiary of Peako Corp., when
consolidating the financial statements using the current rate method?
C. Historical rate - ✔✔Under the temporal method of consolidating foreign
currency financial statements, what exchange rate should be used for
translating the depreciation expense recorded by a subsidiary?
B. The U.S. parent would have had to pay $13,200,000 to acquire the
building in 2010. - ✔✔A Danish subsidiary of a U.S. corporation recorded a
building it purchased in 2010 for 100,000,000 krone, when the exchange
rate was $0.132/krone. The current exchange rate is $0.163/krone. Under
3
©JOSHCLAY 2024/2025. YEAR PUBLISHED 2024.
, the temporal method, how should the translated amount of the restated
asset be interpreted?
D. None of the above - ✔✔A Danish subsidiary of a U.S. corporation
recorded a building it purchased in 2010 for 100,000,000 krone, when the
exchange rate was $0.132/krone. The current exchange rate is
$0.163/krone. Under the current rate method, how should the translated
amount of the restated asset be interpreted?
D. None of the above - ✔✔Which of the following methods uses the current
exchange rate to consolidate all accounts of a foreign subsidiary into the
financial statements of its parent?
C. It is equal to the foreign operation's net asset position. - ✔✔Under the
current rate method of translating foreign currency financial statements,
what is the amount of the balance sheet exposure?
B. Historical rate - ✔✔Under both the temporal method and the current rate
method, what exchange rate should be used to translate a foreign
subsidiary's dividends into parent company currency?
B. Average rate during the year - ✔✔Under the current rate method of
translating foreign currency financial statements, what exchange rate
should be used for cost of goods sold?
4
©JOSHCLAY 2024/2025. YEAR PUBLISHED 2024.
