Ch 11 Multinational Accounting Foreign Currency Transactions And Financial Instruments

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Chapter 12 Multinational Accounting: Issues in Financial Reporting and Translation of Foreign Entity Statements Multiple Choice Questions The balance in Newsprint Corp.'s foreign exchange loss account was $10,000 on December 31, 2008, before any necessary year-end adjustment relating to the following: (1) Newsprint had a $15,000 debit resulting from the restatement in dollars of the accounts of its wholly owned foreign subsidiary for the year ended December 31, 2008. (2) Newsprint had an account payable to an unrelated foreign supplier, payable in the supplier's local currency unit (LCU) on January 15, 2009. The U.S. dollar–equivalent of the payable was $50,000 on the December 1, 2008, invoice date and $53,000 on December…show more content…
$52,500 C. $72,600 D. $69,300 7. Based on the preceding information, the receipt of the dividend will result in a credit to the investment account for: A. $16,800 B. $17,680 C. $18,000 D. $17,600 8. Based on the preceding information, on Leo's consolidated balance sheet at December 31, 2008, what amount should be reported for the goodwill acquired on January 1, 2008? A. $36,845 B. $39,286 C. $36,905 D. $36,607 9. Based on the preceding information, in the stockholders' equity section of Leo's consolidated balance sheet at December 31, 2008, Leo should report the translation adjustment as a component of other comprehensive income of: A. $19,440 B. $17,000 C. $18,786 D. $19,380 10. Which of the following defines a foreign-based entity that uses a functional currency different from the local currency? I. A U.S. subsidiary in Britain maintains its accounting records in pounds sterling, with the majority of its transactions denominated in pounds sterling. II. A U.S. subsidiary in Peru conducts virtually all of its business in Latin America, and uses the U.S. dollar as its major currency. A. I. B. II. C. Both I and II. D. Neither I nor II. 11. When the local currency of the foreign subsidiary is the functional currency, a foreign subsidiary's inventory carried at cost would be converted to U.S. dollars by: A. translation using historical exchange rates. B. remeasurement using historical exchange rates. C. remeasurement using the current exchange rate.

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