Advanced Accounting
14th Edition
ISBN: 9781260247824
Author: Joe Ben Hoyle, Thomas F. Schaefer, Timothy S. Doupnik
Publisher: RENT MCG
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Chapter 10, Problem 18P
A foreign subsidiary’s functional currency is its local currency, which has not experienced significant inflation. The current exchange rate at the
| Insurance Expense | Prepaid Insurance | |
| a. | Yes | Yes |
| b. | Yes | No |
| c. | No | Yes |
| d. | No | No |
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A foreign subsidiary’s functional currency is its local currency, which has not experienced significant inflation. The current exchange rate at the balance sheet date is the appropriate exchange rate for translating:
A foreign subsidiary’s functional currency is its local currency, which has not experienced significant inflation. The current exchange rate at the balance sheet date is the appropriate exchange rate for translating:
Insurance Expense Prepaid Insurance
Yes Yes
Yes. No
No Yes
No No
A foreign subsidiary's functional currency is its local currency which has not experienced significant
inflation. The weighted average exchange rate for the current year would be the appropriate exchange rate
for translating
O a.
Wages expense but not Sales to customers
O b. Sales to customers but not Wages expense
O c.
neither Wages expense nor Sales to customers
O d. Wages expense and Sales to customers
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- 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 Accountsarrow_forwardA sale of goods by a U.S. company was denominated in a foreign currency. The sale resulted in a receivable that was fixed in terms of the amount of foreign currency that would be received. Exchange rates between the dollar and the foreign currency changed so that a loss was incurred. This loss should be included as a a. Extraordinary item in the income statement b. Separate component of stockholders' equity O c. Deferred item in the balance sheet O d. Component of income from continuing operationsarrow_forwardwhich shall be recognized for each item when foreign currency gain or loss that arises from translation of foreign currency denominated transaction to functional currency? a. inventiry b. interest expense c. accounts receivable d. unearned revenuearrow_forward
- Under a flexible exchange rate system, a decrease in the value of a domestic currency in terms of foreign currencies is referred to as Answer 1. an appreciation. 2. a depreciation. 3. a devaluation. 4. a revaluation.arrow_forwardIf the U.S.DOLLAR is determined to be the functional currency, which of the following is usually used to restate to US$ monetary assets and liabilities to the reporting currency? I. The average exchange rate II. The historical exchange rate III. The current exchange rate A) III only. B) Either Il or III, depending on the nature of the item. C) I only. D) II only.arrow_forwardIf the foreign operations reports in the currency of hyperinflationary economy, assets and liabilities are translated at Group of answer choices Average rate Exchange rate on date of transaction Forward rate Closing ratearrow_forward
- Q2-5 In the monetary approach to the balance of payments (under flexible exchange rates) an increase in the proportion of income that people in country A wish to hold as money would, other things equal, lead to _______ in country A's demand for money and to ______ of A's currency in the foreign exchange markets. a. an increase / a depreciation b. an increase / an appreciation c. a decrease / a depreciation d. a decrease / an appreciationarrow_forwardFind the Other Nonoperating Loss or Gain 2019:arrow_forwardA direct exchange quotation is one in which the exchange rate is quoted O a. For the immediate delivery of currencies exchanged O b. For the future delivery of currencies exchanged O c. In terms of how many units of the domestic currency can be converted into one unit of foreign currency O d. In terms of how many units of the foreign currency can be converted into one unit of domestic currencyarrow_forward
- The Oman customer paid cash to Unites States of America is suitable to Select one : a Foreign investment b . Foreign currency translation c . Inflation accounting d Fluctuation riskarrow_forwardThe Hi-Stakes Company has a number of importing and exporting transactions. Importing activities result in payables and exporting activities result in receivables (CU represents the local currency unit of the foreign entity) Required: a. If the direct exchange rate increases, does the dollar weaken or strengthen relative to the other currency? If the indirect exchange rate increases, does the dollar weaken or strengthen relative to the other currency? Direct exchange rate Indirect exchange rate b. Indicate in the following table whether H-Stakes will have a foreign currency transaction gain, loss, or not be affected (NA) by changes in the direct or indirect exchange rates for each of the four situations presented Importing Importing Exporting Exporting Dollar LCU Dollar LCUarrow_forwardWhich of the following refers to an agreement to exchange one currency for another ( two flows of cash) at a specified exchange rate and date between two businesses? O a. Currency call option O b. Spread O c Currency swap O d. Currency put optionarrow_forward
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