Accounting Quiz3

1. Under the remeasurement method, inventory at market would be remeasured at what rate?

Beginning of the year rate.

Current rate.

Average rate.

Composite amount.

Historical rate.

2. Under the remeasurement method, common stock would be remeasured at what rate?

Beginning of the year rate.

Current rate.

Average rate.

Composite amount.

Historical rate.

3. Under the remeasurement method, property, plant & equipment would be remeasured at what rate?

Beginning of the year rate.

Current rate.

Average rate.

Composite amount.

Historical rate.

4. Dilty Corp. owned a subsidiary in France. Dilty concluded that the subsidiary's functional currency was the U.S. dollar. Which one of the following statements would justify this conclusion?

Dilty's functional currency is the dollar and Dilty is the parent.

Dilty is located in the U.S.

Dilty's other subsidiaries all had the dollar as their functional currency.

Most of the subsidiary's sales and purchases were with companies in the U.S.

5. If a subsidiary is operating in a highly inflationary economy, how are the financial statements to be restated?

Remeasurement.

Translation.

Working capital rate.

Historical rate.

Current rate.

6. Where is translation loss (current method) reported in the parent company's financial statements?

Accumulated other comprehensive income.

Cumulative translation adjustment as a deferred liability.

Retained earnings.

Cumulative translation adjustment as a deferred asset.

Net loss in the income statement.

7. Where is the disposition of a remeasurement gain or loss reported in the parent company's financial statements?

Net income/loss in the income statement.

Other comprehensive income.

Cumulative translation adjustment as a deferred asset.

Retained earnings.

Cumulative translation adjustment as a deferred liability.

8. When consolidating a foreign subsidiary, which of the following statements is true?

Subsidiary's income/loss is carried forward to the consolidated balance sheet.

All foreign currency gains/losses are eliminated in the consolidated income statement and balance sheet.

Parent reports a gain or loss in net income from adjusting its investment account under the equity method.

Subsidiary's cumulative translation adjustment is carried forward to the consolidated balance sheet.

Parent reports a cumulative translation adjustment from adjusting its investment account under the equity method.

9. Under the remeasurement method, how would cost of goods sold be remeasured?

Beginning of the year rate.

Current rate.

Average rate.

Composite amount (based on original cost of inventory sold).

Historical rate.

10. When preparing a consolidating statement of cash flows, which of the following statements is false?

A change in long-term debt is translated using the historical rate at the date of the change.

A change in accounts receivable is translated using the current rate.

All operating activity items are translated at an average exchange rate for the period.

Dividends paid are translated using the historical rate at the date of the payment.

All items follow translation rates used for the balance sheet and the income statement.