Chapter P3, Problem 1Q

What are the consequences of accounting for foreign currency translation on financial statement analysis?

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.

Describe guidelines for determining when foreign currency financial statements are to be translated using the current rate method and when they are to be remeasured using the temporal method.

In accounting for foreign currency transactions, which of the following approaches is used in the United States?a. One-transaction perspective; accrue foreign exchange gains and losses.b. One-transaction perspective; defer foreign exchange gains and losses.c. Two-transaction perspective; defer foreign exchange gains and losses.d. Two-transaction perspective; accrue foreign exchange gains and losses.

Discuss the effects of a country’s currency appreciation and depreciation on Balance of payment positions

what are implications for analysis of financial statements that result from the accounting for foreign currency translation?

Briefly summarize the accounting issues arising from foreign currency denominated transactions

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.

When exchange rates are quoted as the number of U.S. dollars per unit of foreign currency, it is referred to as a . European terms b . American terms c . spot-market terms d . fixed-exchange terms