Question

When translating foreign currency financial statements for a company whose functional currency is the U.S. dollar, which of the following accounts is translated using historical exchange rates?

                  Notes Payable            Equipment

a.           Yes                          Yes

b.           Yes                          No

c.            No                           No

d.           No                          Yes

2.         Under the temporal method, monetary assets and liabilities are translated by using the exchange rate existing at the:

a.   beginning of the current year.

b.   date the transaction occurred.

c.   balance sheet date.

d.   None of these.

3.         The process of translating the accounts of a foreign entity into its functional currency when they are stated in another currency is called:

a.   verification.

b.   translation.

c.   remeasurement.

d.   None of these.

4.         Which of the following would be restated using the average exchange rate under the temporal method?

a.   cost of goods sold

b.   depreciation expense

c.   amortization expense

d.   None of these

5.         Paid-in capital accounts are translated using the historical exchange rate under:

a.   the current rate method only.

b.   the temporal method only.

c.   both the current rate and temporal methods.

d.   neither the current rate nor temporal methods.

6.         Which of the following would be restated using the current exchange rate under the temporal method?

a.   Marketable securities carried at cost.

b.   Inventory carried at market.

c.   Common stock.

d.   None of these.

Answer 1

Answer1(D ) when using historical exchange rates in foreighn currency financial statement for company in U.S dollar the note payable rates is no and equipment yes .

Answer 2(C) monetary assets and liabilities are converted using the exchange rate in effect as of the balance sheet date.

Answer 3 ( B ) the process of translating the account of foreighn entity in to functional currency are stated in another currency is called translation.

Answer 4 ( D ) none of these following are restated when using the average exchange rate under the temporal method

Answer 5 ( C ) in paid up capital account are translated using the historical exchange under the both method are used current rate and temporal method.

Answer 6 ( b ) the current exchange rate under the temporal method are restated in inventory carried at market.