Assume that a subsidiary operated in a foreign country, keeps its accounting records in a foreign currency that captures the underlying economics of the subsidiary, and operates independently of the parent company. Which if the following is true? Translation adjustments have an immediate effect on cash flows Translation adjustments should be reflected in earnings a. No No b. No Yes c. Yes No d. Yes Yes

Assume that a subsidiary operated in a foreign country, keeps its accounting records in a foreign currency that captures the underlying economics of the subsidiary, and operates independently of the parent company. Which if the following is true? Translation adjustments have an immediate effect on cash flows Translation adjustments should be reflected in earnings a. No No b. No Yes c. Yes No d. Yes Yes

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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nee 1. If the foreign subsidiary of a US Corporation uses the currency of the region as its functional currency, which of the following methods would they use and where would gains and losses be reported? A. Remeasurement, Temporal method. Income statement. B. Translation, Current Rate method. Comprehensive income. C. Remeasurement, Temporal method. Comprehensive income. D. Translation, Current Rate method. Income statement 2. If the foreign subsidiary of a US Corp uses US currency as its functional currency, which of the following methods would they use? Where would gains and losses be presented? A. Translation, Current Rate method. Comprehensive Income B. Translation, Current Rate method. Income statement C. Remeasurement, Temporal method. Comprehensive income. D. Remeasurement, Temporal Method. Income Statement
Please provide short answers or by saying YES / NO to the following questions: a) All inter-company sales, purchases, AR, AP and profits are eliminated upon consolidation. b) The entity which has control need to consolidate the financials c) To have control over other business, 49% of the voting rights in the other business are sufficient d) What are the three sections under which cash flow statements are analyzed e) Goodwill can be categorized as a liability.
Answer in detail
Which statement is incorrect regarding contractual cash flows that are solely payments of principal and interest (SPPI)? a.Contractual cash flows that are SPPI on the principal amount outstanding are consistent with a basic lending arrangement. b.Principal is the fair value of the financial asset at initial recognition. c.An entity shall assesswhether contractual cash flows are SPPI on the principal amount outstanding for the currency in which the financial asset is denominated. d.An originated or a purchased financial asset can be a basic lending arrangement only if it is a loan in its legal form.
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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