Q63. The Herlitzka Company, a U.S. multinational firm, has a 100% stake in a Swiss subsidiary. The Swiss franc (SF)

     has been determined to be the functional currency. All the common stock of the subsidiary was issued at the

     beginning of the year and the subsidiary uses the FIFO inventory cost-flow assumption. In addition, the value of

     the SF is as follows:

The SF-based balance sheet and income statement data for the Swiss subsidiary are as follows:

The translated value of common stock and long-term debt respectively are:

A)   $5,902 and $3,075.

B)   $5,902 and $3,001.

C)   $6,150 and $3,075.

答案和详解如下：

Correct answer is A)

The basis for using the all current method is when Functional Currency is NOT the same as Parent's Presentation (reporting) Currency. The basis for using the temporal method is when Functional Currency = Parent's Presentation Currency.
Since the SF is the functional currency, use the current rate method. Common stock is translated at the historical rate which is the rate that applied when the transaction was made or $0.5902 and long-term debt is translated at the current rate of $0.615. 10,000 × 0.5902 = $5,902 for common stock and 5000 × 0.6150 = $3,075 for long term debt.