NSG 3500 TEST QUESTIONSAND ANSWERS A+
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Loss of E5,000
If the British subsidiary of a European firm has net exposed assets of £125,000, and the
pound increases in value from €1.40/£ to €1.44/£, the European firm has a translation:
Translation, Remeasurement
Under U.S. accounting and translation practices, use of the current rate method is
termed ________ while use of the temporal method is termed ________.
Current Income, Equity Reserves
If an imbalance results from the accounting method used for translation, the imbalance
is taken either to ________ or ________.
Translation is accomplished through the temporal method
Under the U.S. method of translation procedures, if the financial statements of the
foreign subsidiary of a U.S. company are maintained in the local currency, and the U.S.
dollar is the functional currency, then:
Current rate; temporal
The two basic methods for the translation of foreign subsidiary financial statements are
the ________ method and the ________ method.
If the financial statements of the foreign subsidiary are maintained in the local
currency and the local currency is the functional currency, they are translated by
the temporal method.
Which of the following primary principles of U.S. translation procedures in NOT true?
Loss of $75,000
If the European subsidiary of a U.S. firm has net exposed assets of €750,000, and the
euro drops in value from $1.30/euro to $1.20/€ the U.S. firm has a translation:
Functional
A foreign subsidiary's ________ currency is the currency used in the firm's day-to-day
operations.
Gain of E12,500
If the British subsidiary of a European firm has net exposed assets of £250,000, and the
pound drops in value from €1.35/£ to €1.30/£, the European firm has a translation:
Integrated Foreign Entity
A/An ________ subsidiary is one in which the firm operates as an extension of the
parent company with cash flows highly interrelated with the parent.
Gain $8,000
If the European subsidiary of a U.S. firm has net exposed assets of €200,000, and the
euro increases in value from $1.22/€ to $1.26/€ the U.S. firm has a translation:
Current rate; temporal
The basic advantage of the ________ method of foreign currency translation is that
foreign nonmonetary assets are carried at their original cost in the parent's consolidated
statement while the most important advantage of the ________ method is that the gain
or loss from translation does not pass through the income statement.
equity accounts and fixed assets; current assets and liabilities
GRADED.Buy Quality Materials!
Loss of E5,000
If the British subsidiary of a European firm has net exposed assets of £125,000, and the
pound increases in value from €1.40/£ to €1.44/£, the European firm has a translation:
Translation, Remeasurement
Under U.S. accounting and translation practices, use of the current rate method is
termed ________ while use of the temporal method is termed ________.
Current Income, Equity Reserves
If an imbalance results from the accounting method used for translation, the imbalance
is taken either to ________ or ________.
Translation is accomplished through the temporal method
Under the U.S. method of translation procedures, if the financial statements of the
foreign subsidiary of a U.S. company are maintained in the local currency, and the U.S.
dollar is the functional currency, then:
Current rate; temporal
The two basic methods for the translation of foreign subsidiary financial statements are
the ________ method and the ________ method.
If the financial statements of the foreign subsidiary are maintained in the local
currency and the local currency is the functional currency, they are translated by
the temporal method.
Which of the following primary principles of U.S. translation procedures in NOT true?
Loss of $75,000
If the European subsidiary of a U.S. firm has net exposed assets of €750,000, and the
euro drops in value from $1.30/euro to $1.20/€ the U.S. firm has a translation:
Functional
A foreign subsidiary's ________ currency is the currency used in the firm's day-to-day
operations.
Gain of E12,500
If the British subsidiary of a European firm has net exposed assets of £250,000, and the
pound drops in value from €1.35/£ to €1.30/£, the European firm has a translation:
Integrated Foreign Entity
A/An ________ subsidiary is one in which the firm operates as an extension of the
parent company with cash flows highly interrelated with the parent.
Gain $8,000
If the European subsidiary of a U.S. firm has net exposed assets of €200,000, and the
euro increases in value from $1.22/€ to $1.26/€ the U.S. firm has a translation:
Current rate; temporal
The basic advantage of the ________ method of foreign currency translation is that
foreign nonmonetary assets are carried at their original cost in the parent's consolidated
statement while the most important advantage of the ________ method is that the gain
or loss from translation does not pass through the income statement.
equity accounts and fixed assets; current assets and liabilities
