1 under the temporal method which of the following items would be translated using t 4309894

 

1) Under the temporal method, which of the following items would be translated using the year-end spot rate?

A) Inventory

B) Land

C) Long-term debentures

D) Building

2) Under the temporal method, which of the following items would be translated using the historical rate?

A) Inventory

B) Accounts receivable

C) Accounts payable

D) Long-term debentures

3) Which of the following accounts would be translated to the reporting currency at the current rate of exchange for an integrated subsidiary?

A) Sales occurring evenly throughout the year

B) Deposits received from customers for services to be rendered

C) Capital assets

D) Inventory carried at market under the lower-of-cost-or-market principle

4) All of the following statements are stated in Brazil reals (R$)

Bralta Ltd.

Statement of Financial Position

As at June 30, 20X5

Cash	60,000		Current liabilities	500,000
Accounts receivable	740,000		Bonds payable	2,000,000
Inventories	300,000			2,500,000
Machinery (net)	850,000		Common shares	1,000,000
Land and building (net)	1,800,000		Retained earnings	250,000
	3,750,000			3,750,000

Bralta Ltd.Bralta Ltd. Statement of Comprehensive Income              Statement of Retained Earnings                 For the year ended June 30, 20X5              For the year ended June 30,20X5

Sales	3,500,000		Balance, beg. of year	100,000
Cost of goods sold	1,400,000		Net income	200,000
	2,100,000			300,000
Amortization expense	350,000		Dividends declared	50,000
Bond interest expense	40,000		Balance, end of year	250,000
Other expenses	1,510,000
Net income	200,000

Additional information:

Selected exchange rates:

June 30, 20X4	R$1=$0.5906
June 30, 20X5	R$1=$0.5623
Average for 20X5	R$1=$0.5744

Date of purchase of inventory on hand at year-endR$1 = $.05688

Dividends were declared on June 30, 20X5

Opening inventory = R$130,000

Inventory purchases for the year = R$1,570,000

Machinery, land, and buildings were purchased on June 30, 20X4

Bralta is the Brazilian subsidiary of Altapro Co., a Canadian company. Under the temporal method, what is the total of the non-monetary assets?

A) $1,565,090

B) $1,735,730

C) $2,151,832

D) $2,185,770

5) Which of the following statements about non-monetary assets is true?

A) Under the temporal method, non-monetary assets are translated at the closing rate.

B) Under the temporal method, non-monetary assets are translated at the average rate.

C) Under the current-rate method, non-monetary assets are translated at the historical rate.

D) Under the current-rate method, non-monetary assets are translated at the closing rate.

6) Under the current-rate method, which of the following items would be translated using the historical rate?

A) Land

B) Inventory

C) Long-term debentures

D) Share capital

7) Which of the following statements about the temporal method is true?

A) The accounting exposure is always a net asset balance.

B) The accounting exposure is always a net liability balance.

C) The proportionate amounts of various assets and liabilities change after the statement of financial position is translated.

D) The temporal method and the current rate method both yield the same exchange gain or loss.

8) All of the following statements are stated in Brazil reals (R$)

Bralta Ltd.

Statement of Financial Position

As at June 30, 20X5

Cash	60,000		Current liabilities	500,000
Accounts receivable	740,000		Bonds payable	2,000,000
Inventories	300,000			2,500,000
Machinery (net)	850,000		Common shares	1,000,000
Land and building (net)	1,800,000		Retained earnings	250,000
	3,750,000			3,750,000

Bralta Ltd.Bralta Ltd. Statement of Comprehensive Income              Statement of Retained Earnings              For the year ended June 30, 20X5              For the year ended June 30,20X5

Sales	3,500,000		Balance, beg. of year	100,000
Cost of goods sold	1,400,000		Net income	200,000
	2,100,000			300,000
Amortization expense	350,000		Dividends declared	50,000
Bond interest expense	40,000		Balance, end of year	250,000
Other expenses	1,510,000
Net income	200,000

Additional information:

Selected exchange rates:

June 30, 20X4	R$1 = $0.5906
June 30, 20X5	R$1 = $0.5623
Average for 20X5	R$1 = $0.5744

Date of purchase of inventory on hand at year-endR$1 = $.05688

Dividends were declared on June 30, 20X5

Opening inventory = R$130,000

Inventory purchases for the year = R$1,570,000

Machinery, land, and buildings were purchased on June 30, 20X4

Bralta is the Brazilian subsidiary of Altapro Co., a Canadian company.  Under the current-rate method, what is the balance of the total assets?

A) $2,108,625

B) $2,154,000

C) $2,161,688

D) $2,183,620

Bralta Ltd.

Statement of Financial Position

As at June 30, 20X5

Cash	60,000		Current liabilities	500,000
Accounts receivable	740,000		Bonds payable	2,000,000
Inventories	300,000			2,500,000
Machinery (net)	850,000		Common shares	1,000,000
Land and building (net)	1,800,000		Retained earnings	250,000
	3,750,000			3,750,000

Bralta Ltd.Bralta Ltd. Statement of Comprehensive Income              Statement of Retained Earnings              For the year ended June 30, 20X5              For the year ended June 30,20X5

Sales	3,500,000		Balance, beg. of year	100,000
Cost of goods sold	1,400,000		Net income	200,000
	2,100,000			300,000
Amortization expense	350,000		Dividends declared	50,000
Bond interest expense	40,000		Balance, end of year	250,000
Other expenses	1,510,000
Net income	200,000

Additional information:

Selected exchange rates:

June 30, 20X4	R$1 = $0.5906
June 30, 20X5	R$1 = $0.5623
Average for 20X5	R$1 = $0.5744

Date of purchase of inventory on hand at year-endR$1 = $.05688

Dividends were declared on June 30, 20X5 Opening inventory = R$130,000

Inventory purchases for the year = R$1,570,000

Machinery, land, and buildings were purchased on June 30, 20X4

Bralta is the Brazilian subsidiary of Altapro Co., a Canadian company. Under the current-rate method, what is the net income?

A) $110,460

B) $114,880

C) $115,290

D) $118,120

10) What gives rise to accounting exposure to changes in the foreign exchange rate?

A) Holding common shares in a foreign entity

B) Holding preferred shares in a foreign entity

C) The accounting method used to translate the foreign entity's financial statements

D) The impact of exchange rate fluctuations on the present value of future cash flows