30 câu hỏi
Translation exposure may also be called …….. exposure.
transaction
operating
accounting
currency
……. exposure is the potential for an increase or decrease in the parent company's net worth and reported net income caused by a change in exchange rates since the last transaction.
Transaction
Operating
Currency
Translation
Translation exposure measures
changes in the value of outstanding financial obligations incurred prior to a change in exchange rates.
the potential for an increase or decrease in the parent company's net worth and reported net income caused by a change in exchange rates since the last consolidation of international operations.
an unexpected change in exchange rates impact on short run expected cash flows.
none of the above.
According to your authors, the main purpose of translation is
to prepare consolidated financial statements.
to help management assess the performance of foreign subsidiaries.
to act as an interpreter for managers without foreign language skills.
none of the above.
It is possible to use different exchange rates for different line items on a financial statement.
True
False
If the same exchange rate were used to remeasure every line on a financial statement, then there would be no imbalances from remeasuring.
True
False
Historical exchange rates may be used for …… , while current exchange rates may be used for …...
fixed assets and current assets; income and expense items
equity accounts and fixed assets; current assets and liabilities
current assets and liabilities; equity accounts and fixed assets
equity accounts and current liabilities; current assets and fixed assets
If an imbalance results from the accounting method used for translation, the imbalance is taken either to…..or …….
the bank; the post office
depreciation; the market for foreign exchange swaps
current income; equity reserves
current liabilities; equity reserves
Generally speaking, translation methods by country define the translation process as a function of what two factors?
size; location
a firm's functional currency; location
location; foreign subsidiary independence
foreign subsidiary independence; a firm's functional currency
A/an …….subsidiary is one in which the firm operates as an extension of the parent company with cash flows highly interrelated with the parent.
self - sustaining foreign
integrated foreign entity
foreign
none of the above
Consider two different foreign subsidiaries of Georgia-Pacific Wood Products Inc. The first subsidiary mills trees in Canada and ships its entire product to the Georgia-Pacific U.S. The second subsidiary is also owned by the parent firm but is located in Japan and retails tropical hardwood furniture that it buys from many different sources. The first subsidiary is likely a/an………foreign entity with most of its cash flows in U.S. dollars, and the second subsidiary is more of a/an ……..foreign entity.
domestic; integrated
self-sustaining; domestic
integrated; self-sustaining
self-sustaining; integrated
A foreign subsidiary's ………currency is the currency used in the firm's day-to-day operations.
local
integrated
notational dollar
functional
The ………determines accounting policy for U.S. firms.
Securities and Exchange Commission (SEC)
Federal Reserve System (Fed)
Financial Accounting Standards Board (FASB.
General Agreement on Tariffs and Trade (GATT)
The two basic methods for the translation of foreign subsidiary financial statements are the…….method and the …….. method.
current rate; temporal
temporal; proper timing
current rate; future rate
none of the above
Exchange rate imbalances that are passed through the balance sheet affect a firm's reported income, but imbalances transferred to the income statement do not.
True
False
Which of the following is NOT an economic indicator used by FASB for determining a subsidiary's functional currency?
cash flow indicators
sales price indicators
expense indicators
These are all economic indicators used by FASB.
The current rate method is the most prevalent method today for the translation of financial statements.
True
False
The temporal rate method is the most prevalent method today for the translation of financial statements.
True
False
Gains or losses caused by translation adjustments when using the current rate method are reported separately on the…….. .
consolidated statement of cash flow
consolidated income statement
consolidated balance sheet
none of the above
The biggest advantage of the current rate method of reporting translation adjustments is the fact that the gain or loss goes directly to the reserve account on the consolidated balance sheet and does not pass through the consolidated income statement.
True
False
Under the current rate method, specific assets and liabilities are translated at exchange rates consistent with the timing of the item's creation.
True
False
Under the temporal rate method, specific assets and liabilities are translated at exchange rates consistent with the timing of the item's creation.
True
False
The basic advantage of the …….. method of foreign currency translation is that foreign nonmonetary assets are carried at their original cost in the parent's consolidated statement while the most important advantage of the ……… method is that the gain or loss from translation does not pass through the income statement.
monetary; current rate
temporal; current rate
temporal; monetary
current rate; temporal
The current rate method of foreign currency translation gains or losses resulting from remeasurement are carried directly to current consolidated income and thus introduces volatility to consolidated earnings.
True
False
The temporal method of foreign currency translation gains or losses resulting from remeasurement are carried directly to current consolidated income and thus introduces volatility to consolidated earnings.
True
False
Under the U.S. method of translation procedures, if the financial statements of the foreign subsidiary of a U.S. company are maintained in U.S. dollars,
translation is accomplished through the current rate method.
translation is accomplished through the temporal method.
translation is not required.
the translation method to be used is not obvious.
Under the U.S. method of translation procedures, if the financial statements of the foreign subsidiary of a U.S. company are maintained in the local currency, and the local currency is the functional currency, then
the translation method to be used is not obvious.
translation is accomplished through the temporal method.
translation is not required.
translation is accomplished through the current rate method.
Under the U.S. method of translation procedures, if the financial statements of the foreign subsidiary of a U.S. company are maintained in the local currency, and the U.S. dollar is the functional currency, then
translation is not required.
translation is accomplished through the current rate method.
translation is accomplished through the temporal method.
none of the above.
A major problem for international foreign currency transaction is that FASB and the International Accounting Standards Committee (IASC. do NOT use the same basic translation procedure.
True
False
The main technique to minimize translation exposure is called a/an …….. hedge.
balance sheet
income statement
forward
translation