Chapter 23, Problem 1AA

Flexible budgets and standard costs emphasize the importance of a similar unit of measure for 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 adjust account values for its subsidiaries that compile financial reports in currencies other than the U.S. dollar. Apple's annual report says: "The Company translates the assets and liabilities of its non-U.S. dollar functional currency subsidiaries into U.S. dollars using exchange rates in 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 from these translations are recognized in foreign currency translation included in AOCl in shareholders' equity.''

Required

1. In which financial statement does Apple report the gains and losses from foreign currency translation for subsidiaries that do not use the U.S. dollar as their functional currency? Page 910
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 the period).
a. Cash
b. Sales revenue
C. Property, plant and equipment