Chapter 8, Problem 1AA

Flexible budgets and standard costs emphasize the importance of a similar unit of measure far meaningful analysis. When Apple compiles GAAP financial reports.it applies the same unit of measurement, U.S. dollars. for most measures of business operations. One issue is how to adjustaccount values for its subsidiaries that compile financial reports in currencies other thanthe U.S. dollar. Apple's annualreport says: “The Company translates the assets and liabilities of its not-U.S. dollarfunctional currency subsidiariesinto U.S. dollars using exchange ratesin effect at the end of each period. Revenue and expenses for these subsidiaries are translated using rates that approximate those in effect during the period. Gains and losses fromthese translations are recognized in in foreign currency translation includedin AOCI in shareholders' equity.”^-

Required
1. In which financial statementdoes Apple report thegains and losses from foreign currency translation for subsidiaries that do not use the U.S. dollar as their functional currency?
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2. Translating financial statements requires the use of a currency exchange rate. For each of the following financial statement items, indicate the exchange rate the company would apply to translate into U.S. dollars. Enter “CR” (current rate in effect at the balance sheet date) or “Avg” (the average rate in effect during 1hc period).
a. Cash
b. Sales revenue
c. Property. plant and equipment