Accounting Quiz4

Dilty Corp. owned a subsidiary in France. Dilty concluded that the subsidiary's functional currency was the U.S. dollar. What must Dilty do to ready the subsidiary's financial statements for consolidation?

• A.

  Remeasure them.

• B.

  First remeasure them, then translate them.

• C.

  Translate them.

• D.

  First translate them, then remeasure them.

• E.

  State all of the subsidiary's accounts in U.S. dollars using the exchange rate in effect at the balance sheet date.

According to U.S. GAAP for a local currency perspective, which method is usually required for translating a foreign subsidiary's financial statements into the parent's reporting currency?

• A.

  The monetary/nonmonetary method.

• B.

  The current rate method.

• C.

  The remeasurement method.

• D.

  The current/noncurrent method.

• E.

  The noncurrent rate method.

 The translation adjustment from translating (current method) a foreign subsidiary's financial statements should be shown as

• A.

  An asset or liability (depending on the balance) in the consolidated balance sheet.

• B.

  A component of stockholders' equity in the consolidated balance sheet.

• C.

  A component of cash flows from financing activities in the consolidated statement of cash flows.

• D.

  A revenue or expense (depending on the balance) in the consolidated income statement.

• E.

  An element of the notes which accompany the consolidated financial statements.

Which of the following could explain why accounting is more conservative in some countries than in others?

• A.

  Published Financial statements are the basis for taxation.

• B.

  Published Financial statements are the basis for taxation.

Which of the following is not a problem caused by differences in financial reporting practices across countries?

• A.

  Firms face double taxation on income earned by foreign operations.

• B.

  Firms face double taxation on income earned by foreign operations.

According to the IASB, IFRS are composed of:

• A.

  International financial reporting standards issued by the IASB and international accounting standards issued by the IASC.

• B.

  International financial reporting standards issued by the IASB and international accounting standards issued by the IASC.

What is the Norwalk Agreement?

• A.

  An agreement between the FASB and the IASB to make their existing standards compatible as soon as practicable and to work together to ensure compatibility in the future.

• B.

  An agreement between the FASB and the IASB to make their existing standards compatible as soon as practicable and to work together to ensure compatibility in the future.

Which of the following does not accurately describe a requirement that a company must fulfill when adopting IFRS for the first time?

• A.

  The company must prepare an opening IFRS balance sheet at the beginning of the year for which the company is preparing its first set of IFRS financial statements.

• B.

  The company must prepare an opening IFRS balance sheet at the beginning of the year for which the company is preparing its first set of IFRS financial statements.

In which of the following does the IASB allow firms to choose between two acceptable treatments?

• A.

  Measuring property, plant, and equipment subsequent to acquisition.

• B.

  Measuring property, plant, and equipment subsequent to acquisition.

In the United States, foreign companies filing annual reports with the SEC that are not prepared in accordance with U.S. GAAP Must: