6.Regarding the answers to Greenley’s questions about holding effects: A) Singleton’s answer was correct; Robinson’s answer was correct. B) Singleton’s answer was incorrect; Robinson’s answer was incorrect. C) Singleton’s answer was correct; Robinson’s answer was incorrect. D) Singleton’s answer was incorrect; Robinson’s answer was correct. The correct answer was C) Holding effects refer to the impact of exchange rates on assets and liabilities, such as inventories and cash balances. Singleton’s answer was correct because the change in the value of fixed assets due to exchange rate fluctuations is a holding effect. Robinson’s answer was incorrect because she identified interest payments being denominated in the local currency as her concern. The effect of interest payments would be reflected on the income statement and would be considered a flow effect. As a general rule, holding effects impact the balance sheet and flow effects impact the income statement. 7．Greenley is considering the effects of a change in exchange rates between the Canadian and U.S. dollar, and the resulting impact from incorporating the Canadian division’s results into International Condor’s consolidated financials. If the Canadian dollar appreciates by 10% relative to the U.S. dollar from its 2003 level, what would be the exchange rate and the affect of translating $1,000 in sales from Canadian to U.S. dollars? A) 1.628 CAD/$US 1, $1,000 would decrease from $675.68 to $614.25. B) 1.345 CAD/$US 1, $1,000 would increase from $675.68 to $743.49. C) 1.332 CAD/$US 1, $1,000 would decrease from $1,480 to $1,332. D) 1.628 CAD/$US 1, $1,000 would increase from $1,480 to $1,628. The correct answer was B) One Canadian dollar currently purchases 1/1.48 = 0.6757 USD. If the CAD appreciates by 10%, it will purchase 0.7432 USD. The resulting exchange rate is 1/0.7432 = 1.345. The result would be that $1,000 CAD revenue would increase to $743.49. 8．Regarding Greenley’s question about the high rate of inflation in Russia: A) Rozko’s statement is incorrect; Law’s suggestion is incorrect. B) Rozko’s statement is correct; Law’s suggestion is incorrect. C) Rozko’s statement is correct; Law’s suggestion is correct. D) Rozko’s statement is incorrect; Law’s suggestion is correct. The correct answer was A) SFAS 52 defines a hyperinflationary economy as one that experiences a cumulative 3-year inflation rate of more than 100%. On an annual basis, this means inflation would need to exceed 26% to reach a cumulative 3-year rate of more than 100%. (1.263 – 1) ≈ 1.00, or 100%. Although the inflation rates of 21% and 22% are high, they are not to the point where they would be considered hyperinflationary. Law’s suggestion is also incorrect. In an economy with high inflation, the foreign currency will be rapidly depreciating against the reporting currency. If the current rate were used to translate the balance sheet, it would result in very low values for all assets and liabilities. In a situation where inflation is extremely high, the real value of nonmonetary assets and liabilities is typically not affected by the high inflation because their local currency denominated values increase. As a result, the temporal method is more appropriate because nonmonetary accounts are remeasured at the historical rate. | 
发表于 2008-5-12 14:50
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