Topic Translation of Functional Currency Statements into the Reporting Currency

Topic translation of functional currency statements

  • College of New Jersey
  • ACC 411
  • gibsonm9
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Learning Objective: 12-04 Make calculations and translate financial statements of a foreign subsidiary.Topic: Translation of Functional Currency Statements into the Reporting Currency of the US Company24.The assets listed below of a foreign subsidiary have been converted to U.S. dollars at both current and historical exchange rates. Assuming that the local currency of the foreign subsidiary is the functional currency, what total amount should appear for these assets on the U.S. company's consolidated balance sheet?AssetHistorical RatesCurrent RatePrepaid Insurance$60,000$48,000Buildings (Net)480,000240,000Inventories at Cost300,000288,000Investments, at Cost120,00060,000Total$960,000$636,000A.$636,000 B. $648,000 C. $708,000 D. $960,000 AACSB: Analytical ThinkingAICPA: FN MeasurementBlooms: UnderstandChristensen - Chapter 12 #24Difficulty: 2 MediumLearning Objective: 12-04 Make calculations and translate financial statements of a foreign subsidiary.Topic: Translation of Functional Currency Statements into the Reporting Currency of the US Company
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25.Dover Company owns 90% of the capital stock of a foreign subsidiary located in Italy. Dover's accountant has just translated the accounts of the foreign subsidiary and determined that a debit translation adjustment of $80,000 exists. If Dover uses the fully adjusted equity method for its investment, what entry should Dover record in order to recognize the translation adjustment?Other Comprehensive Income‚ÄĒTranslation Adjustment72,000Investment in Italian Subsidiary72,000A. Option A B. Option B C.Option C D. Option D AACSB: Analytical ThinkingAICPA: FN MeasurementBlooms: UnderstandChristensen - Chapter 12 #25Difficulty: 2 MediumLearning Objective: 12-04 Make calculations and translate financial statements of a foreign subsidiary.Topic: Translation of Functional Currency Statements into the Reporting Currency of the US Company26.For each of the items listed below, state whether they increase or decrease the balance in cumulative translation adjustments (assuming a credit balance at the beginning of the year) when the foreign currency strengthened relative to the U.S. dollar during the year.Net IncomeDividends DeclaredA)DecreaseIncreaseB)IncreaseDecreaseC)DecreaseDecreaseD)IncreaseIncreaseA. Option A B.Option B C. Option C D. Option D AACSB: Reflective ThinkingAICPA: FN Decision MakingBlooms: UnderstandChristensen - Chapter 12 #26Difficulty: 2 MediumLearning Objective: 12-04 Make calculations and translate financial statements of a foreign subsidiary.Topic: Translation of Functional Currency Statements into the Reporting Currency of the US Company
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27.Assuming the pound is the functional currency of the British subsidiary, the translated amount of cost of goods sold that should appear in the consolidated income statement is: The British subsidiary of a U.S. company reported cost of goods sold of 75,000 pounds (sterling) for the current year ended December 31. The beginning inventory was 10,000 pounds, and the ending
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