10. Which of the following defines a foreign-based entity that uses a functional currency different

 
   

Need your ASSIGNMENT done? Use our paper writing service to score better and meet your deadlines.  

10. Which of the following defines a foreign-based
entity that uses a functional currency different from the local currency?

I. A U.S. subsidiary in Britain maintains its accounting records in pounds
sterling, with the majority of its transactions denominated in pounds sterling.
II. A U.S. subsidiary in Peru conducts virtually all of its business in Latin
America, and uses the U.S. dollar as its major currency.
A. I.
B. II.
C. Both I and II.
D. Neither I nor II.

11. When the local currency of the foreign subsidiary
is the functional currency, a foreign subsidiary’s inventory carried at cost
would be converted to U.S. dollars by:
A. translation using historical exchange rates.
B. remeasurement using historical exchange rates.
C. remeasurement using the current exchange rate.
D. translation using the current exchange rate.

12. When the local currency of the foreign subsidiary
is the functional currency, a foreign subsidiary’s income statement accounts
would be converted to U.S. dollars by:
A. translation using historical exchange rates.
B. remeasurement using current exchange rates at the time of statement preparation.
C. translation using average exchange rate for the period.
D. remeasurement using the current exchange rate at the time of statement
preparation.

13. If the restatement method for a foreign subsidiary
involves remeasuring from the local currency into the functional currency, then
translating from functional currency to U.S. dollars, the functional currency
of the subsidiary is:

I. U.S. dollar.
II. Local currency unit.
III. A third country’s currency.
A. I
B. III
C. II
D. Either I or II

14. If the U.S. dollar is the currency in which the
foreign affiliate’s books and records are maintained, and the U.S. dollar is
also the functional currency,
A. the translation method should be used for restatement.
B. the remeasurement method should be used for restatement.
C. either translation or remeasurement could be used for restatement.
D. no restatement is required.

15. All of the following stockholders’ equity accounts
of a foreign subsidiary are translated at historical exchange rates
except:
A. retained earnings.
B. common stock.
C. additional paid-in capital.
D. preferred stock.

16. Dividends of a foreign subsidiary are translated
at:
A. the average exchange rate for the year.
B. the exchange rate on the date of declaration.
C. the current exchange rate on the date of preparation of the financial
statement.
D. the exchange rate on the record date.