Q76. The level of net fixed assets on the 2002 balance sheet would be:

A)   $480.

B)   $462.

C)   $510.

Q77. The translation gain or loss on the income statement would be:

A)   $18.

B)   $25.

C)   $0.

Q78. The level of sales on the income statement would be:

A)     $5,390.

B)     $5,600.

C)     $5,950.

答案和详解如下：

Q76. The level of net fixed assets on the 2002 balance sheet would be:

A)   $480.

B)   $462.

C)   $510.

Correct answer is B)

Net fixed assets are considered non-monetary assets. For non-monetary assets, the temporal method uses the historical rate: 600SF × 0.77$/SF = $462.

Q77. The translation gain or loss on the income statement would be:

A)   $18.

B)   $25.

C)   $0.

Correct answer is A)

When using the temporal method, only cash, accounts receivable, accounts payable, current debt, and long-term debt are translated at the current rate. This means that exposure under the temporal method is:

(cash + accounts receivable) − (accounts payable + current debt + long-term debt)

The currency translation adjustment (CTA) is calculated as the sum of the flow effect and holding effect.

Flow effect (in $) = change in exposure (in LC) × (ending rate − average rate)

Holding gain/loss effect (in $) = beginning exposure (in LC) × (ending rate − beginning rate)

Going back to our data in the example:

Beginning exposure = 400 − 300 = 100

Ending exposure = 600 − 300 = 300

Change in exposure = 300 − 100 = 200

Flow effect (in $) = 200 × [$0.85 − $0.80] = 200 × [$0.05] = $10

Holding gain/loss effect (in $) = 100 × [$0.85 − $0.77] = 100 × [$0.08] = $8

Translation gain (in $) = flow effect + holding gain/loss effect = $10 + $8 = $18

Q78. The level of sales on the income statement would be:

A)     $5,390.

B)     $5,600.

C)     $5,950.

Correct answer is B)

Revenues and SG&A use the average exchange rate with both the temporal and current rate methods.

7000SF × 0.80$/SF = $5600

thansk