Deck 10: Translation of Foreign Currency Financial Statements

Question 1

A subsidiary of Dunder Inc., a U.S. company, was located in a foreign country. The functional currency of this subsidiary was the Stickle (§) which is the local currency where the subsidiary is located. The subsidiary acquired inventory on credit on November 1, 2020, for §160,000 that was sold on January 17, 2021 for §207,000. The subsidiary paid for the inventory on January 31, 2021. Currency exchange rates between the dollar and the Stickle were as follows: What amount would have been reported for cost of goods sold on Dunder's consolidated income statement at December 31, 2021?

A) $33,600.
B) $35,200.
C) $38,400.
D) $40,000.
E) $43,200.

Answer 1

E

Question 2

Under the temporal method, which accounts are remeasured using current exchange rates?

A) All revenues and expenses.
B) All assets and liabilities.
C) Cash, receivables, and most liabilities.
D) All current assets and deferred income.
E) All stockholders' equity.

Answer 2

C

Question 3

Certain balance sheet accounts of a foreign subsidiary of the Crater Co. had been stated in U.S. dollars as follows: If the subsidiary's local currency is its functional currency, what total amount should be included in Crater's balance sheet in U.S. dollars?

A) $688,000.
B) $687,000.
C) $665,000.
D) $679,000.
E) $696,000.

Answer 3

C

Question 4

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.

Question 5

When using the current rate method, the translation adjustment from translating 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 revenue or expense (depending on the balance) in the consolidated income statement.
C) A component of stockholders' equity in the consolidated balance sheet.
D) A component of cash flows from financing activities in the consolidated statement of cash flows.
E) An element of the notes which accompany the consolidated financial statements.

Question 6

Gale Co. was formed on January 1, 2021 as a wholly owned foreign subsidiary of a U.S. corporation. Gale's functional currency was the stickle (§). The following transactions and events occurred during 2021: Exchange rates for 2021 were: What exchange rate should have been used in translating Gale's revenues and expenses for 2021?

A) $1 = §0.50.
B) $1 = §0.46.
C) $1 = §0.47.
D) $1 = §0.44.
E) $1 = §0.48.

Question 7

For a foreign subsidiary that uses the U.S. dollar as its functional currency, what method is required to ready the financial statements for consolidation?

A) Current/Noncurrent Method.
B) Monetary/Nonmonetary Method.
C) Current Rate Method.
D) Temporal Method.
E) Indirect Method.

Question 8

Gale Co. was formed on January 1, 2021 as a wholly owned foreign subsidiary of a U.S. corporation. Gale's functional currency was the stickle (§). The following transactions and events occurred during 2021: Exchange rates for 2021 were: What was the amount of the translation adjustment for 2021?

A) $121,500 increase in relative value of net assets.
B) $121,500 decrease in relative value of net assets.
C) $62,000 decrease in relative value of net assets.
D) $62,000 increase in relative value of net assets.
E) $58,500 increase in relative value of net assets.

Question 9

A subsidiary of Dunder Inc., a U.S. company, was located in a foreign country. The functional currency of this subsidiary was the Stickle (§) which is the local currency where the subsidiary is located. The subsidiary acquired inventory on credit on November 1, 2020, for §160,000 that was sold on January 17, 2021 for §207,000. The subsidiary paid for the inventory on January 31, 2021. Currency exchange rates between the dollar and the Stickle were as follows: What amount would have been reported for this inventory in Dunder's consolidated balance sheet at December 31, 2020?

A) $35,200.
B) $33,600.
C) $38,400.
D) $40,000.
E) $43,200.

Question 10

A U.S. company's foreign subsidiary had the following amounts in stickles (§) in 2021: The average exchange rate during 2021 was §1 = $0.96. The beginning inventory was acquired when the exchange rate was §1 = $1.20. The ending inventory was acquired when the exchange rate was §1 = $0.90. The exchange rate at December 31, 2021 was §1 = $0.84. 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 2021 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.

Question 11

Levinson Co. established a subsidiary in Mexico on January 1, 2021. The subsidiary engaged in the following transactions during 2021: Levinson concluded that the subsidiary's functional currency was the dollar. Exchange rates for 2021 were: What amount of foreign exchange gain or loss would have been recognized in Levinson's consolidated income statement for 2021?

A) $825,000 gain.
B) $685,000 gain.
C) $270,000 loss.
D) $570,000 loss.
E) $315,000 loss.

Question 12

Certain balance sheet accounts of a foreign subsidiary of the Crater Co. had been stated in U.S. dollars as follows: If the U.S. dollar is the functional currency of this subsidiary, what total amount should be included in Crater's balance sheet in U.S. dollars?

A) $688,000.
B) $696,000.
C) $710,000.
D) $665,000.
E) $679,000.

Question 13

Marshall Co. was formed on January 1, 2021 as a wholly owned foreign subsidiary of a U.S. corporation. Marshall's functional currency was the stickle (§). The following transactions and events occurred during 2021: Exchange rates for 2021 were: What was the amount of the translation adjustment for 2021?

A) $119,000 decrease in relative value of net assets.
B) $121,000 decrease in relative value of net assets.
C) $81,000 increase in relative value of net assets.
D) $59,000 decrease in relative value of net assets.
E) $170,000 increase in relative value of net assets.

Question 14

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) First translate, then remeasure them.
B) First remeasure, 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) Remeasure them.

Question 15

In translating a foreign subsidiary's financial statements, which exchange rate does the current rate 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.

Question 16

Under the current rate method, which accounts are translated using current exchange rates?

A) All revenues and expenses.
B) All assets and liabilities.
C) Cash, receivables, and most liabilities.
D) All current assets and deferred income.
E) All stockholders' equity.

Question 17

According to U.S. GAAP, when the local currency is the functional currency, 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/nonmonetary method.
E) The noncurrent rate method.

Question 18

Oscar, Ltd. is a British subsidiary of a U.S. company. Oscar's functional currency is the pound sterling (£). The following exchange rates were in effect during 2021: Oscar reported sales of £1,200,000 during 2021. What amount (rounded) would have been included for this subsidiary in calculating consolidated sales?

A) $1,896,000.
B) $1,956,000.
C) $1,872,000.
D) $769,231.
E) $750,000.

Question 19

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?

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.

Question 20

Oscar, Ltd. is a British subsidiary of a U.S. company. Oscar's functional currency is the pound sterling (£). The following exchange rates were in effect during 2021: On December 31, 2021, Oscar had accounts receivable of £300,000. What amount (rounded) would have been included for this subsidiary in calculating consolidated accounts receivable?

A) $187,500.
B) $192,308.
C) $474,000.
D) $468,000.
E) $480,000.

Question 21

Which method is used for remeasuring a foreign subsidiary's financial statements?

A) Historical rate method.
B) Working capital method.
C) Current rate method.
D) Translation.
E) Temporal method.

Question 22

Under the temporal method, how would cost of goods sold be remeasured?

A) Beginning of the year rate.
B) Average rate.
C) Current rate.
D) A single historical rate.
E) Historical rates.

Question 23

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.

Question 24

Under the current rate method, inventory at net realizable value would be translated for the balance sheet at what rate?

A) Beginning of the year rate.
B) Average rate.
C) Current rate.
D) Historical rate.
E) Composite amount.

Question 25

Under the current rate method, common stock would be translated at what rate?

A) Beginning of the year rate.
B) Average rate.
C) Current rate.
D) Historical rate.
E) Composite amount.

Question 26

Under the temporal method, property, plant & equipment would be remeasured at what rate?

A) Beginning of the year rate.
B) Average rate.
C) Current rate.
D) Historical rate.
E) Composite amount.

Question 27

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.

Question 28

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.

Question 29

Under the current rate method, retained earnings would be translated at what rate?

A) Beginning of the year rate.
B) Average rate.
C) Current rate.
D) Historical rate.
E) Composite amount.

Question 30

Under the temporal method, common stock would be remeasured at what rate?

A) Beginning of the year rate.
B) Average rate.
C) Current rate.
D) Historical rate.
E) Composite amount.

Question 31

Which method of translating a foreign subsidiary's financial statements is correct if it is assumed that the parent's net investment is exposed to foreign exchange risk?

A) Historical rate method.
B) Working capital method.
C) Current rate method.
D) Remeasurement.
E) Temporal method.

Question 32

Under the current rate method, property, plant & equipment would be translated at what rate?

A) Beginning of the year rate.
B) Average rate.
C) Current rate.
D) Historical rate.
E) Composite amount.

Question 33

Under the temporal method, retained earnings would be remeasured at what rate?

A) Beginning of the year rate.
B) Average rate.
C) Current rate.
D) Historical rate.
E) Composite amount.

Question 34

Under the current rate method, depreciation expense would be translated at what rate?

A) Beginning of the year rate.
B) Average rate.
C) Current rate.
D) Historical rate.
E) Composite amount.

Question 35

A U.S. company's foreign subsidiary had the following amounts in stickles (§), the functional currency, in 2021: The average exchange rate during 2021 was §1 = $0.96. The beginning inventory was acquired when the exchange rate was §1 = $1.20. The ending inventory was acquired when the exchange rate was §1 = $0.90. The exchange rate at December 31, 2021 was §1 = $0.84. Assuming that the foreign nation for the subsidiary had a highly inflationary economy, at what amount should that foreign subsidiary's purchases have been reflected in the 2021 U.S. dollar income statement?

A) $11,865,600.
B) $11,577,600.
C) $11,520,000.
D) $11,613,600.
E) $11,523,600.

Question 36

Under the temporal method, inventory at net realizable value would be remeasured for the balance sheet at what rate?

A) Beginning of the year rate.
B) Average rate.
C) Current rate.
D) Historical rate.
E) Composite amount.

Question 37

Under the temporal method, depreciation expense would be remeasured at what rate?

A) Beginning of the year rate.
B) Average rate.
C) Current rate.
D) Historical rate.
E) Composite amount.

Question 38

An historical exchange rate for common stock of a foreign subsidiary is best described as

A) The rate at date of the acquisition business combination.
B) The rate when the common stock was originally issued for the acquisition transaction.
C) The average rate from date of acquisition to the date of the balance sheet.
D) The rate from the prior year's balances.
E) The January 1 exchange rate.

Question 39

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.

Question 40

A U.S. company's foreign subsidiary had the following amounts in stickles (§), the functional currency, in 2021: The average exchange rate during 2021 was §1 = $0.98. The beginning inventory was acquired when the exchange rate was §1 = $1.18. The ending inventory was acquired when the exchange rate was §1 = $0.92. The exchange rate at December 31, 2021 was §1 = $0.82. At what amount should the foreign subsidiary's cost of goods sold have been reflected in the 2021 U.S. dollar income statement?

A) $21,240,000.
B) $16,560,000.
C) $17,640,000.
D) $14,760,000.
E) $17,110,800.

Question 41

Certain balance sheet accounts of a foreign subsidiary of Parker Company at December 31, 2021, have been restated into U.S. dollars as follows: 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, 2021, for the above items?

A) $407,500.
B) $418,000.
C) $396,000.
D) $403,500.
E) $398,500.

Question 42

Esposito is an Italian subsidiary of a U.S. company.Esposito's ending inventory is valued at the average cost for the last quarter of the year.The following account balances are available for Esposito for 2021: Relevant exchange rates follow: Compute the cost of goods sold for 2021 in U.S. dollars using the temporal method.

A) $376,650.
B) $387,750.
C) $388,800.
D) $400,950.
E) $409,050.

Question 43

Certain balance sheet accounts of a foreign subsidiary of Parker Company at December 31, 2021, have been restated into U.S. dollars as follows: If the current rate used to restate these amounts is $0.95, what was the average historical rate used to arrive at the total amount for historical rates?

A) $0.9000.
B) $1.0000.
C) $0.9500.
D) $0.9474.
E) $1.0556.

Question 44

Where is the translation adjustment reported in the parent company's financial statements?

A) Net loss in the income statement.
B) Cumulative translation adjustment as a deferred asset.
C) Cumulative translation adjustment as a deferred liability.
D) Accumulated other comprehensive income.
E) Retained earnings.

Question 45

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

A) Parent reports a cumulative translation adjustment from adjusting its investment account under the equity method.
B) Parent reports a gain or loss in net income from adjusting its investment account under 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 in the consolidated income statement and balance sheet.

Question 46

Where is the remeasurement gain or loss reported in the parent company's financial statements?

A) Net income/loss in 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.

Question 47

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) Temporal method.
E) Current rate.

Question 48

Certain balance sheet accounts of a foreign subsidiary of Parker Company at December 31, 2021, have been restated into U.S. dollars as follows: 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, 2021, for the above items?

A) $407,500.
B) $418,000.
C) $396,000.
D) $403,500.
E) $398,500.

Question 49

When preparing a consolidation worksheet for a parent and its foreign subsidiary accounted for under the equity method, which of the following statements is false?

A) The cumulative translation adjustment included in the Investment in Subsidiary account is eliminated.
B) The excess of fair value over book value since the date of acquisition is revalued for the change in exchange rate.
C) The amount of equity income recognized by the parent in the current year is eliminated.
D) The allocations of excess of fair value over book value at the date of acquisition are eliminated.
E) The subsidiary's stockholders' equity accounts as of the beginning of the year are eliminated.

Question 50

Under the current rate method, how would cost of goods sold be translated?

A) Beginning of the year rate.
B) Average rate.
C) Current rate.
D) Historical rate.
E) Composite amount.

Question 51

Esposito is an Italian subsidiary of a U.S. company.Esposito's ending inventory is valued at the average cost for the last quarter of the year.The following account balances are available for Esposito for 2021: Relevant exchange rates follow: Compute the cost of goods sold for 2021 in U.S. dollars using the current rate method.

A) $376,550.
B) $387,750.
C) $388,800.
D) $400,950.
E) $409,050.

Question 52

A foreign subsidiary uses the first-in first-out inventory method. The following inventory balances are given at December 31, 2021 in local currency units (LCU): The following exchange rates are given for 2021: Compute the December 31, 2021, inventory balance using the lower of cost or net realizable value method under the temporal method.

A) $321,000.
B) $457,600.
C) $596,400.
D) $454,400.
E) $419,000.

Question 53

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 a third-world economy.

Question 54

Esposito is an Italian subsidiary of a U.S. company.Esposito's ending inventory is valued at the average cost for the last quarter of the year.The following account balances are available for Esposito for 2021: Relevant exchange rates follow: Compute ending inventory for 2021 under the temporal method.

A) $13,950.
B) $14,100.
C) $14,400.
D) $14,850.
E) $15,150.

Question 55

When preparing a consolidated statement of cash flows, which of the following statements is false?

A) All operating activity items are translated at an average exchange rate for the period.
B) A change in accounts receivable is translated using the current rate.
C) A change in long-term debt is translated using the historical rate at the date of the change.
D) Dividends paid are translated using the historical rate at the date of the payment.
E) All items follow translation rates used for the balance sheet and the income statement.

Question 56

Kennedy Company acquired all of the outstanding common stock of Hastie Company of Canada for U.S. $350,000 on January 1, 2021, when the exchange rate for the Canadian dollar (CAD) was U.S. $0.70. The fair value of the net assets of Hastie was equal to their book value of CAD 450,000 on the date of acquisition. Any acquisition consideration excess 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, 2021, Hastie's trial balance net income was translated at U.S. $25,000. The average exchange rate for the Canadian dollar during 2021 was U.S. $0.68, and the 2021 year-end exchange rate was U.S. $0.65.Calculate the U.S. dollar amount allocated to the patent at January 1, 2021.

A) $50,000.
B) $35,000.
C) $34,000.
D) $32,500.
E) $28,200.

Question 57

A foreign subsidiary uses the first-in first-out inventory method. The following inventory balances are given at December 31, 2021 in local currency units (LCU): The following exchange rates are given for 2021: Compute the December 31, 2021, inventory balance using the current rate method.

A) $454,400.
B) $457,600.
C) $596,400.
D) $419,000.
E) $321,000.

Question 58

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, 2021. The equipment was purchased on January 1, 2020. Relevant exchange rates for the peso are as follows: 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.

Question 59

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, 2021. The equipment was purchased on January 1, 2020. Relevant exchange rates for the peso are as follows: The financial statements for Perez are remeasured 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.

Question 60

Esposito is an Italian subsidiary of a U.S. company.Esposito's ending inventory is valued at the average cost for the last quarter of the year.The following account balances are available for Esposito for 2021: Relevant exchange rates follow: Compute ending inventory for 2021 under the current rate method.

A) $13,950.
B) $14,100.
C) $14,400.
D) $14,850.
E) $15,150.

Question 61

A subsidiary of Reynolds Inc., a U.S. company, was located in a foreign country. The local currency of this subsidiary was the Euro (€) while the functional currency of this subsidiary was the U.S. dollar. The subsidiary acquired Equipment A on January 1, 2018, for €250,000. Depreciation expense associated with Equipment A was €25,000 per year. On January 1, 2020, the subsidiary acquired Equipment B for €150,000 and Equipment B had associated depreciation expense of €10,000. The subsidiary owned no other depreciable assets. Currency exchange rates between the U.S. dollar and the Euro were as follows: What amount would have been reported for total equipment owned by the subsidiary in Reynolds's consolidated balance sheet at December 31, 2020?

A) $480,000.
B) $487,000.
C) $520,000.
D) $512,000.
E) $489,000.
SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question.
81) On January 1, 2021, Fandu Corp. began operations of a foreign subsidiary. On April 1, 2021, the subsidiary purchased inventory costing 150,000 stickles. One-fourth of this inventory remained unsold at the end of 2021 while 40% of the liability from the purchase had not yet been paid. The pertinent indirect exchange rates were: Required:What should have been the December 31, 2021 inventory and accounts payable balances for this foreign subsidiary as translated into U.S. dollars? (Round your answers to the nearest whole dollar.)

Question 62

Quadros Inc., a Portuguese firm was acquired by a U.S. company on January 1, 2020. Selected account balances are available for the year ended December 31, 2021, and are stated in Euro, the local currency. Relevant exchange rates for 1 Euro are given below: Assume the functional currency is the U.S. Dollar; compute the U.S. balance sheet amount for equipment for 2021.

A) $81,900.
B) $90,900.
C) $83,700.
D) $88,200.
E) $85,500.

Question 63

Quadros Inc., a Portuguese firm was acquired by a U.S. company on January 1, 2020. Selected account balances are available for the year ended December 31, 2021, and are stated in Euro, the local currency. Relevant exchange rates for 1 Euro are given below: Assume the functional currency is the U.S. Dollar; compute the U.S. balance sheet amount for accumulated depreciation for 2021.

A) $40,950.
B) $41,850.
C) $45,450.
D) $42,750.
E) $44,100.

Question 64

A subsidiary of Reynolds Inc., a U.S. company, was located in a foreign country. The local currency of this subsidiary was the Euro (€) while the functional currency of this subsidiary was the U.S. dollar. The subsidiary acquired Equipment A on January 1, 2018, for €250,000. Depreciation expense associated with Equipment A was €25,000 per year. On January 1, 2020, the subsidiary acquired Equipment B for €150,000 and Equipment B had associated depreciation expense of €10,000. The subsidiary owned no other depreciable assets. Currency exchange rates between the U.S. dollar and the Euro were as follows: What amount would have been reported for depreciation expense related to the equipment owned by the subsidiary in Reynolds's consolidated balance sheet at December 31, 2020?

A) $42,600.
B) $44,800.
C) $45,500.
D) $42,300.
E) $41,500.

Question 65

A subsidiary of Reynolds Inc., a U.S. company, was located in a foreign country. The local currency of this subsidiary was the Euro (€) while the functional currency of this subsidiary was the U.S. dollar. The subsidiary acquired Equipment A on January 1, 2018, for €250,000. Depreciation expense associated with Equipment A was €25,000 per year. On January 1, 2020, the subsidiary acquired Equipment B for €150,000 and Equipment B had associated depreciation expense of €10,000. The subsidiary owned no other depreciable assets. Currency exchange rates between the U.S. dollar and the Euro were as follows: What amount would have been reported for total equipment owned by the subsidiary in Reynolds's consolidated balance sheet at December 31, 2018?

A) $285,000.
B) $456,000.
C) $295,000.
D) $300,000.
E) $472,000.

Question 66

Quadros Inc., a Portuguese firm was acquired by a U.S. company on January 1, 2020. Selected account balances are available for the year ended December 31, 2021, and are stated in Euro, the local currency. Relevant exchange rates for 1 Euro are given below: Assume the functional currency is the Euro; compute the U.S. Statement of Retained Earnings amount reported for Dividends in 2021.

A) $19,000.
B) $20,200.
C) $18,600.
D) $19,400.
E) $19,600.

Question 67

Quadros Inc., a Portuguese firm was acquired by a U.S. company on January 1, 2020. Selected account balances are available for the year ended December 31, 2021, and are stated in Euro, the local currency. Relevant exchange rates for 1 Euro are given below: Assume the functional currency is the Euro; compute the U.S. income statement amount for sales for 2021.

A) $364,000.
B) $372,000.
C) $380,000.
D) $360,000.
E) $404,000.

Question 68

Quadros Inc., a Portuguese firm was acquired by a U.S. company on January 1, 2020. Selected account balances are available for the year ended December 31, 2021, and are stated in Euro, the local currency. Relevant exchange rates for 1 Euro are given below: Assume the functional currency is the Euro; compute the U.S. balance sheet amount for inventory at December 31, 2021.

A) $18,800.
B) $19,600.
C) $18,000.
D) $20,200.
E) $19,000.

Question 69

Quadros Inc., a Portuguese firm was acquired by a U.S. company on January 1, 2020. Selected account balances are available for the year ended December 31, 2021, and are stated in Euro, the local currency. Relevant exchange rates for 1 Euro are given below: Assume the functional currency is the U.S. Dollar; compute the U.S. statement of retained earnings amount for dividends for 2021.

A) $19,000.
B) $20,200.
C) $18,600.
D) $19,400.
E) $19,600.

Question 70

Quadros Inc., a Portuguese firm was acquired by a U.S. company on January 1, 2020. Selected account balances are available for the year ended December 31, 2021, and are stated in Euro, the local currency. Relevant exchange rates for 1 Euro are given below: Assume the functional currency is the U.S. Dollar; compute the U.S. balance sheet amount for inventory, at cost, for 2021.

A) $18,800.
B) $19,600.
C) $18,000.
D) $20,200.
E) $19,000.

Question 71

Kennedy Company acquired all of the outstanding common stock of Hastie Company of Canada for U.S. $350,000 on January 1, 2021, when the exchange rate for the Canadian dollar (CAD) was U.S. $0.70. The fair value of the net assets of Hastie was equal to their book value of CAD 450,000 on the date of acquisition. Any acquisition consideration excess 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, 2021, Hastie's trial balance net income was translated at U.S. $25,000. The average exchange rate for the Canadian dollar during 2021 was U.S. $0.68, and the 2021 year-end exchange rate was U.S. $0.65.Amortization of the patent, translated, for 2021 would be

A) $7,000.
B) $10,000.
C) $6,800.
D) $9,000.
E) $6,500.

Question 72

Kennedy Company acquired all of the outstanding common stock of Hastie Company of Canada for U.S. $350,000 on January 1, 2021, when the exchange rate for the Canadian dollar (CAD) was U.S. $0.70. The fair value of the net assets of Hastie was equal to their book value of CAD 450,000 on the date of acquisition. Any acquisition consideration excess 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, 2021, Hastie's trial balance net income was translated at U.S. $25,000. The average exchange rate for the Canadian dollar during 2021 was U.S. $0.68, and the 2021 year-end exchange rate was U.S. $0.65.Kennedy's share of Hastie's net income for 2021 would be

A) $18,000.
B) $15,000.
C) $18,200.
D) $16,000.
E) $18,500.

Question 73

Kennedy Company acquired all of the outstanding common stock of Hastie Company of Canada for U.S. $350,000 on January 1, 2021, when the exchange rate for the Canadian dollar (CAD) was U.S. $0.70. The fair value of the net assets of Hastie was equal to their book value of CAD 450,000 on the date of acquisition. Any acquisition consideration excess 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, 2021, Hastie's trial balance net income was translated at U.S. $25,000. The average exchange rate for the Canadian dollar during 2021 was U.S. $0.68, and the 2021 year-end exchange rate was U.S. $0.65.Compute the amount of the patent reported in the consolidated balance sheet at December 31, 2021.

A) $28,200.
B) $25,700.
C) $35,000.
D) $27,200.
E) $26,000.

Question 74

Quadros Inc., a Portuguese firm was acquired by a U.S. company on January 1, 2020. Selected account balances are available for the year ended December 31, 2021, and are stated in Euro, the local currency. Relevant exchange rates for 1 Euro are given below: Assume the functional currency is the Euro; compute the U.S. balance sheet amount for accumulated depreciation for 2021.

A) $40,950.
B) $41,850.
C) $45,450.
D) $42,750.
E) $44,100.

Question 75

Quadros Inc., a Portuguese firm was acquired by a U.S. company on January 1, 2020. Selected account balances are available for the year ended December 31, 2021, and are stated in Euro, the local currency. Relevant exchange rates for 1 Euro are given below: Assume the functional currency is the U.S. Dollar; compute the U.S. income statement amount for sales for 2021.

A) $364,000.
B) $372,000.
C) $380,000.
D) $360,000.
E) $404,000.

Question 76

Quadros Inc., a Portuguese firm was acquired by a U.S. company on January 1, 2020. Selected account balances are available for the year ended December 31, 2021, and are stated in Euro, the local currency. Relevant exchange rates for 1 Euro are given below: Assume the functional currency is the Euro; compute the U.S. income statement amount for depreciation expense for 2021.

A) $8,190.
B) $8,370.
C) $8,820.
D) $9,090.
E) $8,550.

Question 77

Quadros Inc., a Portuguese firm was acquired by a U.S. company on January 1, 2020. Selected account balances are available for the year ended December 31, 2021, and are stated in Euro, the local currency. Relevant exchange rates for 1 Euro are given below: Assume the functional currency is the Euro; compute the U.S. balance sheet amount for equipment for 2021.

A) $81,900.
B) $90,900.
C) $83,700
D) $88,200.
E) $85,500.

Question 78

A subsidiary of Reynolds Inc., a U.S. company, was located in a foreign country. The local currency of this subsidiary was the Euro (€) while the functional currency of this subsidiary was the U.S. dollar. The subsidiary acquired Equipment A on January 1, 2018, for €250,000. Depreciation expense associated with Equipment A was €25,000 per year. On January 1, 2020, the subsidiary acquired Equipment B for €150,000 and Equipment B had associated depreciation expense of €10,000. The subsidiary owned no other depreciable assets. Currency exchange rates between the U.S. dollar and the Euro were as follows: What amount would have been reported for depreciation expense related to the equipment owned by the subsidiary in Reynolds's consolidated balance sheet at December 31, 2018?

A) $29,500.
B) $28,500.
C) $30,000.
D) $12,000.
E) $11,800.

Question 79

Quadros Inc., a Portuguese firm was acquired by a U.S. company on January 1, 2020. Selected account balances are available for the year ended December 31, 2021, and are stated in Euro, the local currency. Relevant exchange rates for 1 Euro are given below: Assume the functional currency is the U.S. Dollar; compute the U.S. income statement amount for depreciation expense for 2021.

A) $8,190.
B) $8,370.
C) $8,820.
D) $9,090.
E) $8,550.

Question 80

On January 1, 2021, 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 2021: Malont's operating revenues and expenses for 2021 were §800,000 and §650,000, respectively. The appropriate exchange rates were: Required:Calculate the translation adjustment for Malont. (Round your answers to the nearest whole dollar.)