ACC 405 Final Exam Questions With
Correct Answers
What is a subsidiary's functional currency? - CORRECT ANSWER✔✔-The
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currency in which the entity primarily generates and expends cash.
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Temporal Translation Term - CORRECT ANSWER✔✔-Remeasurement
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adjustment
Current Rate Translation Term - CORRECT ANSWER✔✔-Translation
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adjustment
Temporal Currency - CORRECT ANSWER✔✔-US $
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Current Rate Currency - CORRECT ANSWER✔✔-Foreign Currency
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What method do you use if there is hyper inflation? - CORRECT
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ANSWER✔✔-Temporal
Gain/Loss is shown on what statement when using the temporal
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method? - CORRECT ANSWER✔✔-Income Statement
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, Gain/Loss is shown on what statement when using the current rate
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method? - CORRECT ANSWER✔✔-OCI | | |
Which of the following statements is true for the translation process
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using the current rate method? - CORRECT ANSWER✔✔-a. A translation
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adjustment can affect consolidated net income.
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b. Equipment is translated at the historical exchange rate in effect at the
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date of its purchase. | | |
c. A translation adjustment is created by the change in the relative value
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of a subsidiary's monetary assets and monetary liabilities caused by
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exchange rate fluctuations. | |
d. A translation adjustment is created by the change in the relative value
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of a subsidiary's net assets caused by exchange rate fluctuations.
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Answer: D |
A foreign subsidiary of Thun Corporation has one asset (inventory) and
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no liabilities. The functional currency for this subsidiary is the yuan. The
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inventory was acquired for 100,000 yuan when the exchange rate was
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$0.16 = 1 yuan. Consolidated statements are to be produced, and the
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current exchange rate is $0.12 = 1 yuan. Which of the following
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statements is true for the consolidated financial statements? - CORRECT
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ANSWER✔✔-A negative translation adjustment must be reported. | | | | | |
Correct Answers
What is a subsidiary's functional currency? - CORRECT ANSWER✔✔-The
| | | | | | | | |
currency in which the entity primarily generates and expends cash.
| | | | | | | | |
Temporal Translation Term - CORRECT ANSWER✔✔-Remeasurement
| | | | | |
adjustment
Current Rate Translation Term - CORRECT ANSWER✔✔-Translation
| | | | | | |
adjustment
Temporal Currency - CORRECT ANSWER✔✔-US $
| | | | |
Current Rate Currency - CORRECT ANSWER✔✔-Foreign Currency
| | | | | |
What method do you use if there is hyper inflation? - CORRECT
| | | | | | | | | | | |
ANSWER✔✔-Temporal
Gain/Loss is shown on what statement when using the temporal
| | | | | | | | | |
method? - CORRECT ANSWER✔✔-Income Statement
| | | |
, Gain/Loss is shown on what statement when using the current rate
| | | | | | | | | | |
method? - CORRECT ANSWER✔✔-OCI | | |
Which of the following statements is true for the translation process
| | | | | | | | | | |
using the current rate method? - CORRECT ANSWER✔✔-a. A translation
| | | | | | | | |
adjustment can affect consolidated net income.
| | | | | |
b. Equipment is translated at the historical exchange rate in effect at the
| | | | | | | | | | | | |
date of its purchase. | | |
c. A translation adjustment is created by the change in the relative value
| | | | | | | | | | | |
of a subsidiary's monetary assets and monetary liabilities caused by
| | | | | | | | | | |
exchange rate fluctuations. | |
d. A translation adjustment is created by the change in the relative value
| | | | | | | | | | | |
of a subsidiary's net assets caused by exchange rate fluctuations.
| | | | | | | | | |
Answer: D |
A foreign subsidiary of Thun Corporation has one asset (inventory) and
| | | | | | | | | | |
no liabilities. The functional currency for this subsidiary is the yuan. The
| | | | | | | | | | | |
inventory was acquired for 100,000 yuan when the exchange rate was
| | | | | | | | | | |
$0.16 = 1 yuan. Consolidated statements are to be produced, and the
| | | | | | | | | | | |
current exchange rate is $0.12 = 1 yuan. Which of the following
| | | | | | | | | | | |
statements is true for the consolidated financial statements? - CORRECT
| | | | | | | | | |
ANSWER✔✔-A negative translation adjustment must be reported. | | | | | |
