Q70. Jameson now computes the adjustment to WB's financial data due to Kasamatsu's payment of dividends. What is the U.S.

     dollar amount of this adjustment (in thousands)?

A)   $414.

B)   $400.

C)   $387.

Q71. The carrying value of Kasamatsu’s total assets on December 31, 2002, using the all-current method of accounting for

     translations is:

A)   $3,240.

B)   $3,573.

C)   $5,360.

Q72. The yen has depreciated against the dollar in the last year. If the exchange rate in 2001 was in effect during 2002, under the

     all-current method the reported cost of goods sold would have been:

A)   higher by $333.

B)   higher by $287.

C)   lower by $333.

Q73. Jameson has prepared a report assessing the impact of the currency translation on Kasamatsu’s financial ratios. The details of

     his report are as follows:

§           Quick ratio: higher

§           Total asset turnover: higher

With respect to the direction of changes for the ratios, Jameson is:

A)   correct with respect to the quick ratio, but incorrect with respect to the total asset turnover ratio.

B)   incorrect with respect to the quick ratio, but correct with respect to the total asset turnover ratio.

C)   incorrect with respect to the quick ratio, and incorrect with respect to the total asset turnover ratio.

答案和详解如下：

Q70. Jameson now computes the adjustment to WB's financial data due to Kasamatsu's payment of dividends. What is the U.S.

     dollar amount of this adjustment (in thousands)?

A)   $414.

B)   $400.

C)   $387.

Correct answer is B)         

WB receives a cash dividend from their subsidiary. This dividend must be translated at the prevailing exchange rate on the date the dividend is received (145/$). $58,000 / 145 = 400. Both remaining answers use incorrect exchange rates.

Q71. The carrying value of Kasamatsu’s total assets on December 31, 2002, using the all-current method of accounting for

     translations is:

A)   $3,240.

B)   $3,573.

C)   $5,360.

Correct answer is B)         

Under the all-current method, all balance sheet accounts, with the exception of equity, are translated at the current rate. At the current rate of 150 under the all-current method, the amount is: (486,000 + 50,000) / 150 = $3,573.

Q72. The yen has depreciated against the dollar in the last year. If the exchange rate in 2001 was in effect during 2002, under the

     all-current method the reported cost of goods sold would have been:

A)   higher by $333.

B)   higher by $287.

C)   lower by $333.

Correct answer is A)

Under the all-current method, COGS is translated at the average rate in effect during the reporting period. Using the average exchange rate during 2002, COGS is calculated as 280,000 / 140 = $2,000. Using the average rate in effect during 2001 results in COGS of $2,333 (280,000 / 120), or $333 higher.

Q73. Jameson has prepared a report assessing the impact of the currency translation on Kasamatsu’s financial ratios. The details of

     his report are as follows:

§           Quick ratio: higher

§           Total asset turnover: higher

With respect to the direction of changes for the ratios, Jameson is:

A)   correct with respect to the quick ratio, but incorrect with respect to the total asset turnover ratio.

B)   incorrect with respect to the quick ratio, but correct with respect to the total asset turnover ratio.

C)   incorrect with respect to the quick ratio, and incorrect with respect to the total asset turnover ratio.

Correct answer is B)

For the quick ratio, both current assets (with the exception of inventory) and current liabilities will be translated at the current rate. The ratio will be unchanged, so Jameson is incorrect with respect to this one.
For the total asset turnover ratio, sales will be translated at the average rate, while assets will be translated at the current rate. Since the currency is depreciating, the rate used to translate sales will be higher than the rate used to translate assets, resulting in a higher total asset turnover ratio. Jameson is correct with respect to the direction of change for this one.