6.Westmore reported sales of £1,500,000 during 2004. What amount would have been included for this subsidiary in calculating consolidated sales? A) $2,380,952 B) $2,400,000 C) $2,429,150 D) $2,419,355 E)$2,425,876 Answer: A Difficulty: Medium 7.On December 31, Westmore had accounts receivable of £280,000. What amount would have been included for this subsidiary in calculating consolidated accounts receivable?
8.Gunther Co. established a subsidiary in Mexico on January 1, 2004. The subsidiary engaged in the following transactions during 2004:Jan. 1Sold common stock to Gunther for 5,000,000 pesos. Purchased inventory throughout the year, 8,000,000 pesos (¼ remained at year-end).Sales throughout the year totaled 12,000,000 pesos.31Purchased equipment for 1,000,000 pesos.Gunther concluded that the subsidiary’s functional currencywas the dollar. Exchange rates for 2004 were:Jan. 11 peso = $.20311 peso = $.19Dec. 311 peso = $.16Weighted average rate for the year1 peso = $.18What amount of foreign exchange gain or losswould have been recognized on Gunther's consolidated income statementfor 2004? Use the following to answer questions 9-10:Darron Co. was formed on January 1, 2004 as a wholly owned foreign subsidiary of a U.S. corporation. Darron's functional currencywas the stickle (§). The following transactions and events occurred during 2004:Jan. 1Darron issued common stock for §1,000,000.June 30Darron paid dividends of §20,000.Dec. 31Darron reported net income of §80,000 for the year.Exchange rates for 2004 were:
Jan. 1$1 = §.48June 30$1 = §.46Dec. 31$1 = §.42Weighted average rate for the year$1 = §.44
9.What exchange rate should have been used in translating Darron's revenues and expenses for 2004? 10.What was the amount of the translation adjustmentfor 2004? A)$293,479 increase in relative value of net assets B)$302,137 increase in relative value of net assets C)$300,160 increase in relative value of net assets D)$187,418 increase in relative value of net assets E)$270,800 increase in relative value of net assets Answer: B Difficulty: Hard 11.Which of the following translation methods was originally mandated by SFAS No. 8? 12.Which accounts are remeasured using current exchange rates?
You've reached the end of your free preview.
Want to read all 38 pages?