Advance Final

Advance Final Have To Pass This Final
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A spot rate may be defined as
 
The price a foreign currency can be purchased or sold today
the forward rate may be defined as
 
The price today at which a foreign currency can be purchased or sold in the future
Which statement is true regarding a foreign currency option
 
A foreign currency option gives the holder the right but not the obligation to buy or sell foreign currency in the future
A U.S company sells merchandise to a foreign company denominated in U.S. DOLLARS. Which of the following statements is true?
 
No foreign exchange gain or loss will result
A U.S company sells merchandise to a foreign company denominated in the foreign currency. Which of the following statements is true?
 
If the foreign currency appreciates, a foreign exchange gain will result
A U.S company buys merchandise from a foreign company denominated in U.S dollars. Which of the following statements is true?
 
No foreign exchange gain or loss will result
A U.S. company buys merchandise from a foreign company denominated in the foreign currency. Which of the following statements is true?
 
If the foreign currency appreciates, a foreign exchange loss will result
SFAS 133 provides guidance for hedges of all the following sources of foreign exchange risk except ?
 
Deferred foreign currency gains and losses
All of the following data may be needed to determine the fair value of a forward contract at any point in time except?
 
The future spot rate
A forward contract may be used for which of the following
 
1,2,3,4
A company has a discount on a forward contract for an asset. How is the discount recognized over the life of the contract?
 
It is charged to accumulated other comprehensive income
A speculative derivative would be similar to which type of hedge?
 
An option designated as a fair value hedge
Which of the following statements is true concerning hedge accounting?
 
Hedges of foreign currency firm commitments are used for future sales or purchases
All of the following hedges are used for future purchase/sale transactions except?
 
Forward contracts used to hedge a foreign currency denominated liability
Which of the following approaches is used in the United States in accounting for foreign currency transactions?
 
Two-transaction perspective;accrue foreign exchange gains and losses
When a U.S company purchases parts from a foreign company, which of the following will result in no foreign exchange gain or loss?
 
The transaction is denominated in U.S dollars
Angela Inc. a U.S company, had a euro receivable from exports to Spain and a British pound payable resulting from imports from England. Angela Recorded foreign exchange gain related to both its euro receivable and pound payable. Did the foreign currencies increase or decrease in dollar value from the date of the transaction to the settlement date?
 
Euro:Increase
pound:Decrease
Frankfurter Company, A U.S. company had a ruble receivable from exports to Russia and a euro payable resulting from imports from Italy. Frankfurter recorded foreign exchange loss related to both its ruble receivable and euro payable. Did the foreign currencies increase or decrease in dollar value from the date of the transaction to the settlement date?
 
Ruble:Decrease
Euro: Increase
Larson Company, A U.S. company has an India rupee account receivable resulting from an export sale on September 7 to a customer in India. Larson signed a forward contract on September 7 to sell rupees and designated it as a cash flow hedge of a recognized receivable. The spot rate was $.023 and the forward rate was $.021. Which of the following did the U.S. exporter report in Net income
 
Premium revenue
Williams Inc. A U.S. company has a Japanese yen account receivable resulting from an export sale on March 1 to a customer in Japan. the exporter signed a forward contract on March 1 to sell yen and designated it as a cash flow hedge of a recognized receivable. The spot rate was $.0094 and the forward rate was $.0095. Which of the following did the U.S. exporter report in net income
 
Premium Revenue
What journal entry should Eagle prepare on October 1
 
Debit: Foreign Currency Option
Credit:Cash

What Journal entry should Eagle prepare on December 31
 
Debit:Option Expense
Credit:Foreign Currency option
In accounting, the term translation refers to
 
A procedure to prepare a foreign subsidiary financial statements for consolidation
What is a company's functional currency?
 
The currency of the primary economic environment in which it operates
According to SFAS 52 which method is usually required for translating a foreign subsidiary's financial statements into the parent's reporting currency
 
The current rate method
In translating a foreign subsidiary financial statements which exchange rate does the current method require for the subsidiary assets and liabilities?
 
the exchange rate in effect as of the balance sheet date
The translation adjustment from translating a foreign subsidiary's financial statements should
 
A component of stockholders equity on the balance sheet
Which of the following translation methods was originally mandated by SFAS NO. 8?
 
Temporal Method
Which accounts are re-measured using current exchange rates?
 
All current assets and liabilities
For a foreign subsidiary that uses the US dollar as its functional currency, what translation method is required?
 
temporal method
Which of the following statements would justify this conclusion?
 
Most of the subsidiary's sales and purchases were with companies in the U.S
What must Dilty do to ready the subsidiary financial statements for consolidation?
 
Re-measure them
A historical exchange rate for a foreign subsidiary is best described as
 
The rate at date of acquisition for a purchase transaction
A net asset balance sheet exposure exists and the foreign currency appreciates. Which of the following statements is true?
 
There is a positive translation adjustment
A net asset balance sheet exposure exist and the foreign currency depreciates. Which of the following statements is true?
 
there is a negative translation adjustment
A net liability balance sheet exposure exists and the foreign currency appreciates. Which of the following statements is true?
 
there is a negative translation adjustment
A net liability balance sheet exposure exists and the foreign currency depreciates. Which of the following statements is true?
 
There is a positive translation adjustment
Which method of translating a foreign subsidiary's financial statements is correct?
 
Current rate method
Which method of re-measuring a foreign subsidiary's financial statements is correct?
 
Temporal method
Under the temporal method inventory at market would be restated at what rate?
 
Current Rate
Under the current rate method inventory at market would be restated at what rate?
 
Current Rate
Under the temporal method common stock would be restated at what rate?
 
historical rate
Under The current rate method property,plant and equipment would be restated at what rate?
 
Current Rate
Under the temporal method, property, plant and equipment would be restated at what rate?
 
Historic Rate
Under the current rate method retained earnings would be restated at what rate?
 
Composite amount
Under the temporal method, retained earnings would be restated at what rate?
 
Composite amount
Under the current rate method, depreciation expense would be restated at what rate?
 
Average Rate
Under the temporal method, depreciation expense would be restated at what rate?
 
Historical Rate
Under the temporal method how would cost of goods sold be restated?
 
Composite amount
Under the current rate method, how would cost goods sold be restated?
 
Average Rate
How is the disposition of the translated gain or loss reported on the parent company financial statements
 
other comprehensive income
How is the disposition of the re-measurement gain or loss reported on the parent company's financial statements
 
net income/loss on the income statement
A highly inflationary economy is defined as
 
cumulative 3 year inflation in excess of 100%
If a subsidiary is operating in a highly inflationary economy, how are the financial statements to be restated?
 
Re-measurement
When consolidating a foreign subsidiary, which of the following statements is true?
 
Parent reports a cumulative translation adjustment using the equity method
When preparing a consolidating statement of cash flows, which of the following statements is false?
 
Subsidiary dividends are deducted as a financing activity
When translating Quadro's financial statement which of the following statements is true?
 
there will be a positive cumulative translation adjustment reported on the consolidated balance sheet
For what amount should sales be credited on December 1?
 
17,241
What amount of foreign exchange gain or loss should be recorded on December 31?
 
941 gain
What amount of foreign exchange gain or loss should be recorded on January 30?
 
1516 Loss
Meisner Co ordered parts costing 100,000 for a foreign supplier on May 12 when the spot rate was .24 per sickle. A one month forward contract was signed on that date to purchase 100,00 at a forward rate of .25 per sickle. One June 12, when the parts were received and payment was made, the spot rate was .28 per sickle. At what amount should inventory be reported?
 
$28,000
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