Q83. As Heltzel is translating the balance sheet and income statement, which of the following are closest to the values Heltzel      

     determines for revenues and accounts payable for 2005?

       Revenues                        Accounts Payable

A)            £44,118                               £3,529

B)            £41,667                              £3,333

C)            £44,118                               £3,333

Q84. Using the appropriate translation method, what will be the translation gain or loss Heltzel will record, and which of the financial

     statements will he record it on?

       Translation Gain/Loss                     Financial Statement

A)            −$392.14                                    Balance sheet

B)            −$392.14                                   Income statement

C)            +$1,518.06                               Income statement

[此贴子已经被作者于2009-1-20 13:14:06编辑过]

答案和详解如下：

Q83. As Heltzel is translating the balance sheet and income statement, which of the following are closest to the values Heltzel      

     determines for revenues and accounts payable for 2005?

       Revenues                        Accounts Payable

A)            £44,118                               £3,529

B)            £41,667                              £3,333

C)            £44,118                               £3,333

Correct answer is C)

Since the British pound is the functional currency, the temporal method should be used. Under both the all-current and temporal methods, revenues are translated at the average rate. The value Heltzel will calculate for revenues is $75,000 / $1.70 = £44,118. Also, under both the temporal and all-current methods, monetary assets and liabilities are calculated using the current exchange rate. The value Heltzel will calculate for accounts payable will be $6,000 / $1.80 = £3,333.

Q84. Using the appropriate translation method, what will be the translation gain or loss Heltzel will record, and which of the financial

     statements will he record it on?

       Translation Gain/Loss                     Financial Statement

A)            −$392.14                                    Balance sheet

B)            −$392.14                                   Income statement

C)            +$1,518.06                               Income statement

Correct answer is C)

Since the British pound is the functional currency, the temporal method should be used. Under the temporal method, the translation gain/loss is reported on the income statement.

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 = (1,200 + 6,500) − (5,000 + 1,500 + 25,000) = −23,800

Ending exposure = (1,400 + 9,900) − (6,000 + 1,500 + 23,500) = −19,700

Change in exposure = −19,700 − (−23,800) = 4,100

Flow effect (in $) = 4,100 × [(1 / 1.80) − (1 / 1.70)] = 4,100 × [0.5556 − 0.5882] = −133.66

Holding gain/loss effect (in $) = −23,800 × [(1 / 1.80) − (1 / 1.60)] = −23,800 × [0.5556 − 0.6250] = 1,651.72

Translation loss (in $) = flow effect + holding gain/loss effect = −133.66 + 1,651.72 = $1,518.06.