chapter 10 ke.ypdf

ch8 Key

1. In accounting, the term translation refers to A. The calculation of gains or losses from hedging transactions B. The calculation of exchange rate gains or losses on individual transactions in foreign currencies C. The procedure required to identify a company's functional currency D. The calculation of gains or losses from all transactions for the year E. A procedure to prepare a foreign subsidiary's financial statements for consolidation

Difficulty: Easy Hoyle - Chapter 08 #1

2. What is a company's functional currency? A. The currency of the primary economic environment in which it operates B. The currency of the country where it has its headquarters C. The currency in which it prepares its financial statements D. The reporting currency of its parent for a subsidiary E. The currency it chooses to designate as such


3. According to SFAS 52, which method is usually required for translating a foreign subsidiary's financial statements into the parent's reporting currency? A. The temporal method B. The current rate method C. The current/noncurrent method D. The monetary/non-monetary method E. The noncurrent rate method


4. In translating a foreign subsidiary's financial statements, which exchange rate does the current method require for the subsidiary's assets and liabilities? A. The exchange rate in effect when each asset or liability was acquired B. The average exchange rate for the current year C. A calculated exchange rate based on market value D. The exchange rate in effect as of the balance sheet date E. The exchange rate in effect at the start of the current year


5. The translation adjustment from translating a foreign subsidiary's financial statements should be shown as A. An asset or liability (depending on the balance) on the consolidated balance sheet B. A revenue or expense (depending on the balance) on the consolidated income statement C. A component of stockholders' equity on the consolidated balance sheet D. A component of cash flows from financing activities on the consolidated statement of cash flows E. An element of the notes which accompany the consolidated financial statements


Westmore, Ltd. is a British subsidiary of a U.S. company. Westmore's functional currency is the pound sterling. The following exchange rates were in effect during 2008:

Hoyle - Chapter 08

6. Westmore reported sales of 1,500,000 during 2008. What amount (rounded) 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

Difficulty: Medium Hoyle - Chapter 08 #6

7. On December 31, Westmore had accounts receivable of 280,000. What amount (rounded) would have been included for this subsidiary in calculating consolidated accounts receivable? A. $444,444 B. $451,613 C. $142,600 D. $176,400 E. $452,830


8. Gunther Co. established a subsidiary in Mexico on January 1, 2008. The subsidiary engaged in the following transactions during 2008:

What amount of foreign exchange gain or loss would have been recognized on Gunther's consolidated income statement for 2008? A. $200,400 loss B. $90,000 loss C. $226,000 loss D. $235,600 loss E. $250,000 loss

Difficulty: Hard Hoyle - Chapter 08 #8

Darron Co. was formed on January 1, 2009 as a wholly owned foreign subsidiary of a U.S. corporation. Darron's functional currency was the stickle (). The following transactions and events occurred during 2007:

Hoyle - Chapter 08

9. What exchange rate should have been used in translating Darron's revenues and expenses for 2009? A. $1 = .48 B. $1 = .44 C. $1 = .46 D. $1 = .42 E. $1 = .45


10. What was the amount of the translation adjustment for 2009? 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


11. Which of the following translation methods was originally mandated by SFAS No. 8? A. Current/Noncurrent Method B. Monetary/Non-monetary Method C. Current Rate Method D. Temporal Method E. Indirect Method


12. Which accounts are re-measured using current exchange rates? A. All revenues and expenses B. All assets and liabilities C. All monetary assets and liabilities D. All current assets and liabilities E. All noncurrent assets and liabilities


13. For a foreign subsidiary that uses the US dollar as its functional currency, what translation method is required? A. Current/Noncurrent Method B. Monetary/Non-monetary Method C. Current Rate Method D. Temporal Method E. Indirect Method


Dilty Corp. owned a subsidiary in France. Dilty concluded that the subsidiary's functional currency was the U.S. dollar.

Hoyle - Chapter 08

14. Which one of the following statements would justify this conclusion? A. Most of the subsidiary's sales and purchases were with companies in the U.S B. Dilty's functional currency is the dollar and Dilty is the parent C. Dilty's other subsidiaries all had the dollar as their functional currency D. Generally accepted accounting principles require that the subsidiary's functional currency must be the dollar if consolidated financial statements are to be prepared E. Dilty is located in the U.S


15. What must Dilty do to ready the subsidiary's financial statements for consolidation? A. First translate them, then re-measure them B. First re-measure them, then translate them C. State all of the subsidiary's accounts in U.S. dollars using the exchange rate in effect at the balance sheet date D. Translate them E. Re-measure them


Certain balance sheet accounts of a foreign subsidiary of the Tulip Co. had been stated in U.S. dollars as follows:

Hoyle - Chapter 08

16. If a foreign currency is the functional currency of this subsidiary, what total should have been included in Tulip's balance sheet for the preceding items? A. $609,000 B. $658,000 C. $602,000 D. $630,000 E. $616,000


17. If the U.S. dollar is the functional currency of this subsidiary, what total should have been included in Tulip's balance sheet for the items above? A. $609,000 B. $658,000 C. $602,000 D. $630,000 E. $616,000


A subsidiary of Porter Inc., a U.S. company, was located in a foreign country. The functional currency of this subsidiary was the stickle (). The subsidiary acquired inventory on credit on November 1, 2008, for 120,000 that was sold on January 17, 2009 for 156,000. The subsidiary paid for the inventory on January 31, 2009. Currency exchange rates between the dollar and the stickle were as follows:

Hoyle - Chapter 08

18. What figure would have been reported for this inventory on Porter's consolidated balance sheet at December 31, 2008? A. $24,000 B. $26,400 C. $22,800 D. $27,600 E. $28,800


19. What figure would have been reported for cost of goods sold on Porter's consolidated income statement at December 31, 2009? A. $24,000 B. $26,400 C. $22,800 D. $27,600 E. $28,800


20. A U.S. company's foreign subsidiary had the following amounts in stickles () in 2009:

The average exchange rate during 2009 was 1 = $.96. The beginning inventory was acquired when the exchange rate was 1 = $1.20. The ending inventory was acquired when the exchange rate was 1 = $.90. The exchange rate at December 31, 2009 was 1 = $.84. Assuming that the foreign country had a highly inflationary economy, at what amount should the foreign subsidiary's cost of goods sold have been reflected in the 2009 U.S. dollar income statement? A. $11,253,600 B. $11,577,600 C. $11,649,600 D. $11,613,600 E. $11,523,600


21. A historical exchange rate for a foreign subsidiary is best described as A. The rate at date of acquisition for a purchase transaction B. The rate when the common stock was originally issued for a purchase transaction C. The average rate from date of acquisition to the date of balance sheet D. The rate from the prior year's balances E. The January 1 exchange rate


22. A net asset balance sheet exposure exists and the foreign currency appreciates. Which of the following statements is true? A. There is no translation adjustment B. There is a transaction loss C. There is a transaction gain D. There is a negative translation adjustment E. There is a positive translation adjustment


23. A net asset balance sheet exposure exists and the foreign currency depreciates. Which of the following statements is true? A. There is no translation adjustment B. There is a transaction loss C. There is a transaction gain D. There is a negative translation adjustment E. There is a positive translation adjustment


24. A net liability balance sheet exposure exists and the foreign currency appreciates. Which of the following statements is true? A. There is no translation adjustment B. There is a transaction loss C. There is a transaction gain D. There is a negative translation adjustment E. There is a positive translation adjustment


25. A net liability balance sheet exposure exists and the foreign currency depreciates. Which of the following statements is true? A. There is no translation adjustment B. There is a transaction loss C. There is a transaction gain D. There is a negative translation adjustment E. There is a positive translation adjustment


26. Which method of translating a foreign subsidiary's financial statements is correct? A. Historical rate method B. Working capital method C. Current rate method D. Re-measurement E. Temporal method


27. Which method of re-measuring a foreign subsidiary's financial statements is correct? A. Historical rate method B. Working capital method C. Current rate method D. Translation E. Temporal method


28. Under the temporal method, inventory at market would be restated at what rate? A. Beginning of the year rate B. Average rate C. Current rate D. Historical rate E. Composite amount


29. Under the current rate method, inventory at market would be restated at what rate? A. Beginning of the year rate B. Average rate C. Current rate D. Historical rate E. Composite amount


30. Under the temporal method, common stock would be restated at what rate? A. Beginning of the year rate B. Average rate C. Current rate D. Historical rate E. Composite amount


31. Under the current rate method, common stock would be restated at what rate? A. Beginning of the year rate B. Average rate C. Current rate D. Historical rate E. Composite amount


32. Under the current rate method, property, plant & equipment would be restated at what rate? A. Beginning of the year rate B. Average rate C. Current rate D. Historical rate E. Composite amount


33. Under the temporal method, property, plant & equipment would be restated at what rate? A. Beginning of the year rate B. Average rate C. Current rate D. Historical rate E. Composite amount


34. Under the current rate method, retained earnings would be restated at what rate? A. Beginning of the year rate B. Average rate C. Current rate D. Historical rate E. Composite amount


35. Under the temporal method, retained earnings would be restated at what rate? A. Beginning of the year rate B. Average rate C. Current rate D. Historical rate E. Composite amount


36. Under the current rate method, depreciation expense would be restated at what rate? A. Beginning of the year rate B. Average rate C. Current rate D. Historical rate E. Composite amount


37. Under the temporal method, depreciation expense would be restated at what rate? A. Beginning of the year rate B. Average rate C. Current rate D. Historical rate E. Composite amount


38. Under the temporal method, how would cost of goods sold be restated? A. Beginning of the year rate B. Average rate C. Current rate D. Historical rate E. Composite amount


39. Under the current rate method, how would cost of goods sold be restated? A. Beginning of the year rate B. Average rate C. Current rate D. Historical rate E. Composite amount


40. How is the disposition of the translated gain or loss reported on the parent company's financial statements? A. Net income/loss on the income statement B. Cumulative translation adjustment as a deferred asset C. Cumulative translation adjustment as a deferred liability D. Other comprehensive income E. Retained earnings


41. How is the disposition of the re-measurement gain or loss reported on the parent company's financial statements? A. Net income/loss on the income statement B. Cumulative translation adjustment as a deferred asset C. Cumulative translation adjustment as a deferred liability D. Other comprehensive income E. Retained earnings


42. A highly inflationary economy is defined as A. Cumulative 5-year inflation in excess of 100% B. Cumulative 3-year inflation in excess of 100% C. Cumulative 5-year inflation in excess of 90% D. Cumulative 3-year inflation in excess of 90% E. Any country designated as a company operating in an underworld economy


43. If a subsidiary is operating in a highly inflationary economy, how are the financial statements to be restated? A. Historical rate B. Working capital rate C. Translation D. Re-measurement E. Current rate


44. When consolidating a foreign subsidiary, which of the following statements is true? A. Parent reports a cumulative translation adjustment using the equity method B. Parent's reports a gain or loss in net income using the equity method C. Subsidiary's cumulative translation adjustment is carried forward to the consolidated balance sheet D. Subsidiary's income/loss is carried forward to the consolidated balance sheet E. All foreign currency gains/losses are eliminated on the consolidated income statement and balance sheet


45. When preparing a consolidating statement of cash flows, which of the following statements is false? A. Subsidiary dividends are deducted as a financing activity B. Noncontrolling interest in subsidiary dividends are deducted as a financing activity C. Parent dividends are deducted as a financing activity D. Amortization of cost over book value of the investment in subsidiary is added to net income as an operating activity using the indirect method E. Intercompany gains do not appear on the consolidated statement of cash flows


The following account balances are available for Esposito, an Italian U.S. subsidiary for 2009:

Hoyle - Chapter 08

46. Compute the cost of goods sold for 2009 in U.S. dollars using the temporal method. A. $376,650 B. $387,750 C. $388,800 D. $400,950 E. $409,050


47. Compute the cost of goods sold for 2009 in U.S. dollars using the current rate method. A. $376,550 B. $387,750 C. $388,800 D. $400,950 E. $409,050


48. Compute ending inventory for 2009 under the temporal method. A. $13,950 B. $14,100 C. $14,400 D. $14,850 E. $15,150


49. Compute ending inventory for 2009 under the current rate method. A. $13,950 B. $14,100 C. $14,400 D. $14,850 E. $15,150


The following inventory balances for 2008 in local currency units (LCU) are given:

Hoyle - Chapter 08

50. Compute the December 31, 2008, inventory balance using the lower of cost or market method under the temporal method. A. $429,000 B. $457,600 C. $596,000 D. $568,000 E. $473,600


51. Compute the December 31, 2008, inventory balance using the current rate method. A. $454,400 B. $457,600 C. $596,000 D. $568,000 E. $473,600


Perez Company, a Mexican subsidiary of a U.S. company, sold equipment costing 200,000 pesos with accumulated depreciation of 75,000 pesos for 140,000 pesos on March 1, 2009. The equipment was purchased on January 1, 2008, when the exchange rate for the peso was $.11. Relevant exchange rates for the peso are as follows:

Hoyle - Chapter 08

52. The financial statements for Perez are translated by its U.S. parent. What amount of gain or loss would be reported in its translated income statement? A. $1,530 B. $1,575 C. $1,590 D. $1,090 E. $1,650


53. The financial statements for Perez are re-measured by its U.S. parent. What amount of gain or loss would be reported in its translated income statement? A. $1,530 B. $1,575 C. $1,465 D. $1,090 E. $1,650


Certain balance sheet accounts of a foreign subsidiary of Parker Company at December 31, 2008, have been restated into U.S. dollars as follows:

Hoyle - Chapter 08

54. Assuming the functional currency of the subsidiary is the U.S. dollar, what total should be included in Parker's consolidated balance sheet at December 31, 2008, for the above items? A. $407,500 B. $418,000 C. $396,000 D. $403,500 E. $398,500


55. Assuming the functional currency of the subsidiary is the local currency, what total should be included in Parker's consolidated balance sheet at December 31, 2008, for the above items? A. $407,500 B. $418,000 C. $396,000 D. $403,500 E. $398,500


56. If the current rate used to restate these balances is $.95, what was the historical rate used to restate the same balances? A. $.90 B. $1.00 C. $.95 D. $.9474 E. $1.0556


Kennedy Company acquired all of the outstanding common stock of Hastie Company of Canada for U.S. $350,000 on January 1, 2009, when the exchange rate for the Canadian dollar was U.S. $.70. The fair value of the net assets of Hastie was equal to their book value of C$450,000 (Canadian dollars) on the date of acquisition. Any excess cost over fair value was attributed to an unrecorded patent with a remaining life of five years. The functional currency of Hastie is the Canadian dollar. For the year ended December 31, 2009, Hastie's translated net income was $25,000. The average exchange rate for the Canadian dollar during 2009 was U.S. $.68 and the 2009 year-end exchange rate was U.S. $.65.

Hoyle - Chapter 08

57. Calculate the U.S. $ amount allocated to the patent at January 1, 2009. A. $50,000 B. $35,000 C. $34,000 D. $32,500 E. $28,200


58. Amortization of the patent, translated, for 2009 would be A. $7,000 B. $10,000 C. $6,800 D. $9,000 E. $6,500


59. Compute the amount of the patent reported on the consolidated balance sheet at December 31, 2009. A. $28,200 B. 428,000 C. $35,000 D. $27,200 E. $26,000


60. Kennedy's share of Hastie's net income for 2009 would be A. $18,000 B. $15,000 C. $18,200 D. $16,000 E. $18,500


Quadros Inc., a Portugese firm was acquired by a U.S. company on January 1, 2007. Selected account balances are available for the year ended December 31, 2008 and are stated in euro, the local currency.

Hoyle - Chapter 08

61. Assume the functional currency is the euro, compute the restated amount for sales for 2008. A. $364,000 B. $372,000 C. $380,000 D. $360,000 E. $404,000


62. Assume the functional currency is the euro, compute the restated amount for inventory for 2008. A. $18,600 B. $19,600 C. $18,000 D. $20,200 E. $19,000


63. Assume the functional currency is the euro, compute the restated amount for equipment for 2008. A. $81,900 B. $90,900 C. $83,700 D. $88,200 E. $85,500


64. Assume the functional currency is the euro, compute the restated amount for dividends for 2008. A. $19,000 B. $20,200 C. $18,600 D. $19,400 E. $19,600


65. Assume the functional currency is the euro, compute the restated amount for accumulated depreciation for 2008. A. $40,950 B. $41,850 C. $45,450 D. $42,750 E. $44,100


66. Assume the functional currency is the euro, compute the restated amount for depreciation expense for 2008. A. $8,190 B. $8,370 C. $8,820 D. $9,090 E. $8,550


67. Assume the functional currency is the U.S. dollar, compute the restated amount for sales for 2008. A. $364,000 B. $372,000 C. $380,000 D. $360,000 E. $404,000


68. Assume the functional currency is the U.S. dollar, compute the restated amount for inventory for 2008. A. $18,600 B. $19,600 C. $18,000 D. $20,200 E. $19,000


69. Assume the functional currency is the U.S. dollar, compute the restated amount for equipment for 2008. A. $81,900 B. $90,900 C. $83,700 D. $88,200 E. $85,500


70. Assume the functional currency is the U.S. dollar, compute the restated amount for dividends for 2008. A. $19,000 B. $20,200 C. $18,600 D. $19,400 E. $19,600


71. Assume the functional currency is the U.S. dollar, compute the restated amount for accumulated depreciation for 2008. A. $40,950 B. $41,850 C. $45,450 D. $42,750 E. $44,100


72. Assume the functional currency is the U.S. dollar, compute the restated amount for depreciation expense for 2008. A. $8,190 B. $8,370 C. $8,820 D. $9,090 E. $8,550


73. When translating Quadros' financial statements, which of the following statements is true? A. There will be a re-measurement gain reported on the consolidated income statement B. There will be a re-measurement loss reported on the consolidated income statement C. There will be a positive cumulative translation adjustment reported on the consolidated balance sheet D. There will be a positive cumulative translation adjustment reported on the consolidated income statement E. There will be a transaction gain reported on the consolidated income statement


74. A foreign subsidiary was purchased on January 1, 2008. Determine the exchange rate used to restate the following accounts at December 31, 2008. Land was purchased on October 1, 2008. Relevant exchange dates follow: (A) January 1, 2008 (B) October 1, 2008 (C) December 31, 2008 (D) Average, 2008 (E) Composite, using multiple dates. Identify the exchange rate used to translate items 1-5: ____ 1. Land. ____ 2. Equipment. ____ 3. Bonds payable. ____ 4. Common stock. ____ 5. Retained earnings. Identify the exchange rate used to re-measure the items 6-10: ____ 6. Land. ____ 7. Equipment. ____ 8. Bonds payable. ____ 9. Common stock. ____ 10. Retained earnings.

(1.) C; (2) C; (3.) C; (4.) A; (5.) E; (6.) B; (7.) A; (8.) C; (9.) A; (10.) E


75. In translating a foreign subsidiary's financial statements, what exchange rate should be used for the subsidiary's revenues and expenses?

The historical rate that was in effect when the revenues and expenses were incurred should be used unless those revenues and expenses occur throughout the year, then a weighted average exchange rate for the year may be used.


76. How can a parent corporation determine the functional currency for a foreign subsidiary that conducts business in more than one country?

If the foreign subsidiary has distinct and separable operations in different countries, each of these operations can use a different currency. If the subsidiary does not have distinct operations in different countries, the currency in which the most transactions are carried out should be selected.


77. What exchange rate should be used to translate (a) revenues and expenses that occur throughout the year and (b) a gain or loss that occurs on a specific day?

Revenues and expenses occurring throughout the year may be translated using the average exchange rate for the year. A gain or loss occurring on a specific date should be translated using the rate in effect on that day.


78. Perkle Co. owned a subsidiary in Belgium; the subsidiary's functional currency was the Belgian franc. During 2009, Perkle engaged in hedging transactions to offset part of the subsidiary's net asset position. How should the effects of exchange rate fluctuations on the currency hedge be accounted for?

Any effect on the contract resulting from exchange rate fluctuations is classified as a translation adjustment, rather than as a foreign exchange gain or loss.


79. Under what circumstances would the translation of a foreign subsidiary's financial statements not be required?

The translation of a foreign subsidiary's financial statements is not required in the following two situations: (A.) when the subsidiary's functional currency is the U.S. dollar. (B.) when the subsidiary operates in a highly inflationary economy.


80. A foreign subsidiary of a U.S. corporation purchased equipment on January 4, 2005. (A.) How would depreciation expense on the equipment be translated for 2008? (B.) How would depreciation expense on the equipment be re-measured for 2008?

(A.) Depreciation expense would be translated using the average exchange rate for 2008. (B.) Depreciation expense would be re-measured using the exchange rate in effect when the equipment was purchased.


81. What exchange rate would be used to translate the asset and liability account balances of a foreign subsidiary? What justification can be given for using this exchange rate?

Assets and liabilities are translated using the current exchange rate, the rate in effect at the balance sheet date. This rate is chosen because assets and liabilities are expected to affect future cash flows. Therefore, they should be translated using the most up-to-date exchange rates available.


82. Farley Brothers, a U.S. company, had a subsidiary in Italy. Under what conditions would the U.S. dollar be the functional currency for this subsidiary?

To determine the subsidiary's functional currency, Farley Brothers should look at the volume of the subsidiary's transactions in various currencies. If most of the subsidiary's sales and purchases are in dollars, the dollar may be the logical choice for the functional currency. If there are many transactions between the subsidiary and the parent and if most of the subsidiary's financing comes from the U.S., the dollar may be a better choice than the lira or other European currencies.


83. What is the justification for the re-measurement of foreign currency transactions?

Re-measurement is needed for transactions denominated in a currency other than the entity's functional currency. A U.S. company which engages in transactions in other countries may have to re-measure some of its transactions. The implicit justification for re-measurement is that foreign currency transactions which affect monetary assets and liabilities have a direct effect on the entity's cash flows. There will be direct effects on future cash flows in the functional currency and thus an effect on net income.


84. Contrast the purpose of re-measurement with the purpose of translation.

The purpose of translation is to transform a subsidiary's financial statements, prepared in its functional currency, into the reporting currency of the parent. The purpose of re-measurement is to restate transactions from one currency into the functional currency of the entity. Re-measurement is also required when a subsidiary's financial statements have been denominated in a currency other than the subsidiary's functional currency.


85. On January 1, 2008, Fandu Corp. started a foreign subsidiary. On April 1, 2008, the subsidiary purchased inventory costing 150,000 stickles. One-fourth of this inventory remained unsold at the end of 2008 while 40% of the liability from the purchase had not yet been paid. The pertinent exchange rates were:

Required: What should have been the December 31, 2008 inventory and accounts payable balances for this foreign subsidiary as translated into U.S. dollars? (Round your answers to the nearest whole dollar.)


86. On January 1, 2008, Veldon Co., a U.S. corporation with the U.S. dollar as its functional currency, established Malont Co. as a subsidiary. Malont is located in the country of Sorania and its functional currency is the stickle. Malont engaged in the following transactions during 2008:

Required: Calculate the translation adjustment for Malont. (Round your answers to the nearest whole dollar.)


Ginvold Co. began operating a subsidiary in a foreign country on January 1, 2008 by acquiring all of the common stock for 50,000. This subsidiary immediately borrowed 120,000 on a five-year note with ten percent interest payable annually beginning on January 1, 2008. A building was then purchased for 170,000. This property had a ten-year anticipated life and no salvage value and was to be depreciated using the straight-line method. The building was immediately rented for three years to a group of local doctors for 6,000 per month. By year-end, payments totaling 60,000 had been made. On October 1, 5,000 were paid for a repair made on that date. A cash dividend of 6,000 was transferred back to Ginvold on December 31, 2008. The functional currency for the subsidiary was the stickle. Currency exchange rates were as follows:

Hoyle - Chapter 08

87. Prepare an income statement for this subsidiary in stickles and then translate these amounts into U.S. dollars.


88. Prepare a statement of retained earnings for this subsidiary in stickles and then translate these amounts into U.S. dollars.

Ginvold Co. Subsidiary Statement of Retained Earnings For the Year Ended December 31, 2008


89. Prepare a balance sheet for this subsidiary in stickles and then translate these amounts into U.S. dollars.

Ginvold Co. Subsidiary Balance Sheet December 31, 2008


90. Prepare a statement of cash flows for this subsidiary in stickles and then translate these amounts into U.S. dollars.

Ginvold Co. Subsidiary Statement of Cash Flows For the Year Ended, December 31, 2008


Boerkian Co. started 2008 with two assets: cash of 26,000 (stickles) and land that originally cost 72,000 when acquired on April 4, 2004. On May 1, 2008, the company rendered services to a customer for 36,000, an amount immediately paid in cash. On October 1, 2008, the company incurred an operating expense of 22,000 that was immediately paid. No other transactions occurred during the year. Currency exchange rates were as follows:

Hoyle - Chapter 08

91. Assume (1) that Boerkian was a foreign subsidiary of a U.S. multinational company that used the U.S. dollar as its functional currency and (2) that the stickle was the functional currency of the subsidiary. What was the translation adjustment for this subsidiary for 2008?


92. Assume (1) that Boerkian was a foreign subsidiary of a U.S. multinational company that used the U.S. dollar as its reporting currency and (2) that the U.S. dollar was the functional currency of the subsidiary. What was the re-measurement gain or loss for 2008?


93. Required: Assume that Boerkian was a foreign subsidiary of a U.S. multinational company. On the December 31, 2008 balance sheet, what was the translated value of the Land account?


94. Assume that Boerkian was a foreign subsidiary of a U.S. multinational company. On the December 31, 2008 balance sheet, what was the re-measured value of the Land account?


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