In accordance with U.S. generally accepted accounting principles, which translation combination is appropriate for a foreign operation whose functional currency is the U.S. dollar? Choose the correct option. Method Treatmemt of transition adjustment a. Current rate other comprehensive income b. Current rate Gain or loss in net income c. Temporal other comprehensive income d. Temporal Gain or loss in net income

In accordance with U.S. generally accepted accounting principles, which translation combination is appropriate for a foreign operation whose functional currency is the U.S. dollar? Choose the correct option. Method Treatmemt of transition adjustment a. Current rate other comprehensive income b. Current rate Gain or loss in net income c. Temporal other comprehensive income d. Temporal Gain or loss in net income

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter8: Investing Activities

Section: Chapter Questions

Problem 14QE

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Forex difference arising from translating foreign currency denominated transactions to functional currency shall be recognized in Group of answer choices Other comprehensive income with classification adjustment Other comprehensive income without reclassification adjustment Retained earnings Profit and loss
In accordance with U.S. generally accepted accounting principles, which translation combination is appropriate for a foreign operation whose functional currency is the U.S. dollar?
Which translation method results in a set of financial statements as if the foreign subsidiary’s transactions were carried out in US dollars? Current rate method Temporal method
Assuming that the functional currency of a foreign subsidiary is the local currency, which of the following accounts would be translated at the current rate on the Balance Sheet date (B/S Rate)? a.Additional Paid-In Capital b.Cost of Goods Sold c.Retained Earnings d.Allowance for Doubtful Accounts
In the translated financial statements, which method of translation maintains the underlying valuation methods used in preparing the foreign currency financial statements? Choose the correct.a. Current rate method; income statement translated at average exchange rate for the year.b. Current rate method; income statement translated at exchange rate at the balance sheet date.c. Temporal method.d. Monetary/nonmonetary method.
How to translate a foreign subsidiary’s financial statements into its parent’s reporting currency using the current rate method and calculate the related translation adjustment?
In the translated financial statements, which method of translation maintains the underlying valuation methods used in preparing the foreign currency financial statements?a. Current rate method; income statement translated at average exchange rate for the year.b. Current rate method; income statement translated at exchange rate at the balance sheet date.c. Temporal method.d. Monetary/nonmonetary method.
Assume that a U.S. company has a French subsidiary whose functional currency is the euro. Explain why the translation adjustment is not included as a component of net income on the consolidated income statement.
In presenting foreign currency denominated transactions to the functional currency of the entity, which of the following statements is correct? a. When nonmonetary items are translated from foreign currency to functional currency in the financial statements, foreign currency gain of loss will be recognized. b. Monetary items shall be initially recognized and measured at the exchange rate prevailing at the end of the reporting period. c. Foreign currency gain or loss arising from translation of the foreign currency denominated items to functional currency shall be presented in other comprehensive income with reclassification adjustment to profit or loss if realized. d. Foreign currency denominated income statement accounts shall be translated using the exchange rate at the date of transaction.
Which of the following statements is true for the translation process using the current rate method? Choose the correct.a. A translation adjustment can affect consolidated net income.b. Equipment is translated at the historical exchange rate in effect at the date of its purchase.c. A translation adjustment is created by the change in the relative value of a subsidiary’s monetary assets and monetary liabilities caused by exchange rate fluctuations.d. A translation adjustment is created by the change in the relative value of a subsidiary’s net assets caused by exchange rate fluctuations.
The translation (remeasurement) adjustment reported in a translation when the functional currency is not the foreign currency is included a. as a separate component of other comprehensive income b. in the current liability section of the balance sheet as deferred revenue c. in the calculation of net income d. none of the above
Exchange difference arising from the translation of financial statements of a foreign operation into the presentation currency of the reporting entity shall be accounted for as Group of answer choices Translation gain or loss as a component of profit or loss Transaction gain or loss as component of other comprehensive income Translation gain or loss as a component of other comprehensive income Transaction gain or loss as component of profit or loss

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	Method	Treatmemt of transition adjustment
a.	Current rate	other comprehensive income
b.	Current rate	Gain or loss in net income
c.	Temporal	other comprehensive income
d.	Temporal	Gain or loss in net income