Q58. With respect to the Japanese subsidiary, what method should be used to value its accounts receivable, what is the appropriate

     exchange rate, and what is the translated value (in USD)?

A)   Current method, current rate, USD 11.5 million.

B)   Temporal method, current rate, USD 11.5 million.

C)   Current method, average rate, USD 12.3 million.

Q59. With respect to the European HQ subsidiary, what method should be used to value its SG&A expenses, what is the

     appropriate exchange rate, and what is the translated value (USD)?

A)   Current method, average rate, USD 206.4 million.

B)   Temporal method, average rate, USD 206.4 million.

C)   Current method, current rate, USD 216.7 million.

Q60. With respect to the British subsidiary, what method should be used to value its fixed assets, what is the appropriate exchange

     rate, and what is the translated value (USD)?

A)   Temporal method, historical rate, USD 547.7 million.

B)   Current method, current rate, USD 599.7 million.

C)   Current method, historical rate, USD 547.7 million.

Q61. With respect to the Chinese subsidiary, what method should be used to value its long term debt, what is the appropriate

     exchange rate, and what is the translated value (in USD)?

A)   Temporal method, current rate, USD 35.0 million.

B)   Temporal method, historical rate, USD 29.3 million.

C)   Current method, current rate, USD 35.0 million.

Q62. Which of the following statements is most accurate with respect to accounting for inventory and cost of goods sold (COGS)

     using last-in first out (LIFO) under the temporal method?

A)   Inventory is translated at the historical rate, and COGS is translated at the average rate.

B)   Inventory is translated at the average rate while COGS is translated at the historical rate.

C)   Inventory is translated at the historical rate, and COGS is translated at the historical rate.

答案和详解如下：

Q58. With respect to the Japanese subsidiary, what method should be used to value its accounts receivable, what is the appropriate

     exchange rate, and what is the translated value (in USD)?

A)   Current method, current rate, USD 11.5 million.

B)   Temporal method, current rate, USD 11.5 million.

C)   Current method, average rate, USD 12.3 million.

Correct answer is A)

Self-contained, independent subsidiaries reporting their results in the local currency that is also the functional currency use the current method. Assets under the current method are translated using the current rate. Hence, 1400 × 0.0082 = USD 11.5 million.

Q59. With respect to the European HQ subsidiary, what method should be used to value its SG&A expenses, what is the

     appropriate exchange rate, and what is the translated value (USD)?

A)   Current method, average rate, USD 206.4 million.

B)   Temporal method, average rate, USD 206.4 million.

C)   Current method, current rate, USD 216.7 million.

Correct answer is A)

Self-contained, independent subsidiaries reporting their results in the local currency that is also the functional currency use the current method. Expenses under the current method are translated using the average rate. Hence, 200 × 1.0318 = USD 206.4 million.

Q60. With respect to the British subsidiary, what method should be used to value its fixed assets, what is the appropriate exchange

     rate, and what is the translated value (USD)?

A)   Temporal method, historical rate, USD 547.7 million.

B)   Current method, current rate, USD 599.7 million.

C)   Current method, historical rate, USD 547.7 million.

Correct answer is A)

Self-contained, independent subsidiaries reporting their results in the local currency that is NOT the functional currency use the temporal method. Fixed assets under the temporal method are translated using the historical rate. Hence, 370 × 1.4803 = USD 547.7 million.

Q61. With respect to the Chinese subsidiary, what method should be used to value its long term debt, what is the appropriate

     exchange rate, and what is the translated value (in USD)?

A)   Temporal method, current rate, USD 35.0 million.

B)   Temporal method, historical rate, USD 29.3 million.

C)   Current method, current rate, USD 35.0 million.

Correct answer is A)

Self-contained, independent subsidiaries reporting their results in the local currency that is NOT the functional currency use the temporal method. Long-term debt under the temporal method is considered a monetary liability and is translated using the current rate. Hence, 290 × 0.1208 = USD 35.0 million.

Q62. Which of the following statements is most accurate with respect to accounting for inventory and cost of goods sold (COGS)

     using last-in first out (LIFO) under the temporal method?

A)   Inventory is translated at the historical rate, and COGS is translated at the average rate.

B)   Inventory is translated at the average rate while COGS is translated at the historical rate.

C)   Inventory is translated at the historical rate, and COGS is translated at the historical rate.

Correct answer is C)

If using LIFO, units sold during the year are the ones purchased during the year. Under the temporal method, COGS and inventory would be translated at the historical rate.