Advanced Accounting
14th Edition
ISBN: 9781260247824
Author: Joe Ben Hoyle, Thomas F. Schaefer, Timothy S. Doupnik
Publisher: RENT MCG
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Question
Chapter 10, Problem 5P
To determine
Identify the appropriate answer for the given statement from the given choices.
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At what rates should the following balance sheet accounts in foreign statements be translated (using the current rate method) into U.S. dollars?
How should exchange gains or losses resulting from foreign currency transactions be accounted for?
Included as component of income from continuing operations for the period in which the rate changes.
Included as component of other comprehensive income for the period in which the rate changes.
Included in the statement of financial position as a deferred item.
Included in net earnings for gains, but deferred for losses.
The earnings stated in the consolidated income statement of a U.S. MNC is likely to ____ in the depreciation of the euro relative to the U.S. dollar .
A.
decrease
B.
unchanged
C.
increase
D.
be undetermined
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- 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 incomearrow_forwardWhen the functional currency is identified as the U.S. dollar, land purchased by a foreign subsidiary after the controlling interest was acquired by the parent company should be translated using the: a. forward rate b. current rate in effect at the balance sheet date historical rate in effect when the land was purchased C. d. average exchange rate for the current periodarrow_forwardWhich 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 methodarrow_forward
- 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?arrow_forwardAssuming 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_forwardThe 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 abovearrow_forward
- Record the entry for additional depreciation expense on revaluation of equipment due to conversion from U.S. GAAP to IFRS. Note: Enter debits before credits. Date Account Title Debit Credit 12/31/2021arrow_forwardWhat is the subsequent measurement of foreign currency denominated monetary items Closing rate Average rate Historical rate Opening ratearrow_forwardQuestion: When accounting for foreign exchange transactions, which of the following statements accurately describes the use of the "Temporal Method" under the International Financial Reporting Standards (IFRS)? A) The Temporal Method is used to account for foreign exchange gains and losses on monetary assets and liabilities at the historical exchange rate. B) The Temporal Method is used to account for foreign exchange gains and losses on monetary assets and liabilities at the current exchange rate. C) The Temporal Method is used to account for foreign exchange gains and losses on non-monetary assets and liabilities at the historical exchange rate. D) The Temporal Method is used to account for foreign exchange gains and losses on non-monetary assets and liabilities at the current exchange rate.arrow_forward
- What is the initial measurement of foreign currency transaction? Closing rate for both monetary items and nonmonetary items. Historical rate for monetary items and closing rate for nonmonetary items Historical rate for both monetary item and nonmonetary items. Historical rate for nonmonetary items and closing rate for monetary items.arrow_forwardIn which of the following cases in a translation adjustment necessary? Notes to financial statements are converted from one currency to another Preparation of consolidated financial statements Hedging of foreign currency Foreign currency financial statements are converted to another currencyarrow_forwardDescribe 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.arrow_forward
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