International Accounting Exam 2 Questions With Complete
Solutions
►Several stock exchanges now encourage GRI-compliant
Sustainability Reports for certain listed companies selling stock.
For instance: Correct Answers ►the Securities and Exchange
Board of India mandated that listed entities must submit
Business Responsibility Reports, as a part of their Annual
Reports.
►the Brazil Stock Exchange recommended listed companies to
either publish a Sustainability Report or explain why they do
not.
►
►Singapore Stock Exchange issued a "Policy Statement on
Sustainability Reporting" encouraging listed companies in the
Exchange to voluntarily commit to sustainability practices and
reporting.
►
►the U.S. Nasdaq recommended listed companies to either
publish a Sustainability Report or explain why they do not.
►To facilitate comparison between companies on Sustainability
Measures and provide a Sustainability Reporting Framework,
the Coalition for Environmentally Responsible Economies
(CERES) founded: Correct Answers ► the Global Reporting
Initiative (GRI) in the 1990s.
►
►Over 3,500 companies prepare and publish sustainability
reports that follow GRI Standards. Most companies prepare
,reports voluntarily; however, some companies are required to
report.
►
►Similar to accounting standards, the GRI framework rests on
concepts of consistency, comparability, objectivity and
verifiability.
►Today, many companies are voluntarily preparing
sustainability reports. However, while the concept of
sustainability includes economic performance, most
sustainability reports generally only report on environmental,
social and governance/ethics performance
To address this demand, the International Integrated Reporting
Council (IIRC) was created in. Correct Answers August 2010
A company makes an export sale denominated in a foreign
currency and allows the customer one month to pay. Under the
two-transaction perspective, accrual approach, how does the
company account for fluctuations in the exchange rate for the
foreign currency? Correct Answers Foreign currency
receivables resulting from export sales are revalued at the end of
accounting periods using the current spot rate. An increase in the
value of a receivable will be offset by reporting a foreign
exchange gain in net income, and a decrease will be offset by a
foreign exchange loss. Foreign exchange gains and losses are
accrued even though they have not yet been realized.
A foreign currency receivable will generate a foreign exchange
gain when the foreign currency... Correct Answers increases in
dollar value. A foreign currency payable will generate a foreign
,exchange gain when the foreign currency decreases in dollar
value. Hence, the correct combination is yen (increase) and real
(decrease).
A foreign subsidiary of Wampoa Ltd. has one asset (inventory)
and no liabilities. The subsidiary operates with a significant
degree of autonomy from Wampoa and primarily uses the local
currency (the won) in carrying out its transactions. Since the
date the inventory was acquired, the won has decreased in value
in relation to Wampoa's reporting currency. In translating the
foreign subsidiary's won financial statements into the parent's
reporting currency, which of the following is true under IFRS?
A translation gain must be reported in net income.
A positive translation adjustment must be reported in
stockholders' equity.
A negative translation adjustment must be reported in
stockholders' equity.
A translation loss must be reported in net income. Correct
Answers A negative translation adjustment must be reported in
stockholders' equity.
An import purchase causes a foreign currency payable to be
carried... Correct Answers on the books. If the foreign currency
depreciates, the dollar value of the foreign currency payable
decreases, yielding a foreign exchange gain.
, Balance Sheet Exposure Correct Answers Assets and liabilities
translated at the current exchange rate are exposed to risk of a
translation adjustment.
When foreign currency appreciates, a net asset exposure results
in a positive translation adjustment.
When foreign currency appreciates, a net liability exposure
results in a negative translation adjustment.
Assets and liabilities translated at the historical exchange rate
are not exposed to a translation adjustment.
Business Case for Sustainability and Sustainability Reporting
Correct Answers ►The business reasons for sustainability
reporting are extensive and are ultimately based upon what
would influence Stakeholder value and not just Shareholder
value. Stakeholders can be both internal and external to the
organization and might include the following groups:
►Investors
►Suppliers
►Government legislators at the national, state and local levels
►Non-governmental organization (NGO) such as Ceres, IIRC
or CDP
►Industry associations
►The community at large, including customers, consumers,
activist groups, researchers and the media, etc.
►Employees and employee groups such as unions.
Solutions
►Several stock exchanges now encourage GRI-compliant
Sustainability Reports for certain listed companies selling stock.
For instance: Correct Answers ►the Securities and Exchange
Board of India mandated that listed entities must submit
Business Responsibility Reports, as a part of their Annual
Reports.
►the Brazil Stock Exchange recommended listed companies to
either publish a Sustainability Report or explain why they do
not.
►
►Singapore Stock Exchange issued a "Policy Statement on
Sustainability Reporting" encouraging listed companies in the
Exchange to voluntarily commit to sustainability practices and
reporting.
►
►the U.S. Nasdaq recommended listed companies to either
publish a Sustainability Report or explain why they do not.
►To facilitate comparison between companies on Sustainability
Measures and provide a Sustainability Reporting Framework,
the Coalition for Environmentally Responsible Economies
(CERES) founded: Correct Answers ► the Global Reporting
Initiative (GRI) in the 1990s.
►
►Over 3,500 companies prepare and publish sustainability
reports that follow GRI Standards. Most companies prepare
,reports voluntarily; however, some companies are required to
report.
►
►Similar to accounting standards, the GRI framework rests on
concepts of consistency, comparability, objectivity and
verifiability.
►Today, many companies are voluntarily preparing
sustainability reports. However, while the concept of
sustainability includes economic performance, most
sustainability reports generally only report on environmental,
social and governance/ethics performance
To address this demand, the International Integrated Reporting
Council (IIRC) was created in. Correct Answers August 2010
A company makes an export sale denominated in a foreign
currency and allows the customer one month to pay. Under the
two-transaction perspective, accrual approach, how does the
company account for fluctuations in the exchange rate for the
foreign currency? Correct Answers Foreign currency
receivables resulting from export sales are revalued at the end of
accounting periods using the current spot rate. An increase in the
value of a receivable will be offset by reporting a foreign
exchange gain in net income, and a decrease will be offset by a
foreign exchange loss. Foreign exchange gains and losses are
accrued even though they have not yet been realized.
A foreign currency receivable will generate a foreign exchange
gain when the foreign currency... Correct Answers increases in
dollar value. A foreign currency payable will generate a foreign
,exchange gain when the foreign currency decreases in dollar
value. Hence, the correct combination is yen (increase) and real
(decrease).
A foreign subsidiary of Wampoa Ltd. has one asset (inventory)
and no liabilities. The subsidiary operates with a significant
degree of autonomy from Wampoa and primarily uses the local
currency (the won) in carrying out its transactions. Since the
date the inventory was acquired, the won has decreased in value
in relation to Wampoa's reporting currency. In translating the
foreign subsidiary's won financial statements into the parent's
reporting currency, which of the following is true under IFRS?
A translation gain must be reported in net income.
A positive translation adjustment must be reported in
stockholders' equity.
A negative translation adjustment must be reported in
stockholders' equity.
A translation loss must be reported in net income. Correct
Answers A negative translation adjustment must be reported in
stockholders' equity.
An import purchase causes a foreign currency payable to be
carried... Correct Answers on the books. If the foreign currency
depreciates, the dollar value of the foreign currency payable
decreases, yielding a foreign exchange gain.
, Balance Sheet Exposure Correct Answers Assets and liabilities
translated at the current exchange rate are exposed to risk of a
translation adjustment.
When foreign currency appreciates, a net asset exposure results
in a positive translation adjustment.
When foreign currency appreciates, a net liability exposure
results in a negative translation adjustment.
Assets and liabilities translated at the historical exchange rate
are not exposed to a translation adjustment.
Business Case for Sustainability and Sustainability Reporting
Correct Answers ►The business reasons for sustainability
reporting are extensive and are ultimately based upon what
would influence Stakeholder value and not just Shareholder
value. Stakeholders can be both internal and external to the
organization and might include the following groups:
►Investors
►Suppliers
►Government legislators at the national, state and local levels
►Non-governmental organization (NGO) such as Ceres, IIRC
or CDP
►Industry associations
►The community at large, including customers, consumers,
activist groups, researchers and the media, etc.
►Employees and employee groups such as unions.
