Q21. Dave Iverson, CFA, is analyzing the recently released financial statement of Global Corp., a large multinational manufacturing company with production facilities across Europe and Southeast Asia. The company’s choice of functional currency is not disclosed, but Iverson does notice that Global Corp. does not have any cumulative translation adjustments (CTA) on its balance sheet. Which of the following statements is most accurate based upon Iverson’s observation? A) The all-current method of foreign currency translation is used exclusively. B) The temporal method of foreign currency translation is used for at least some of its subsidiaries. C) The temporal method of foreign currency translation is used exclusively.
Q22. Which of the following currency translation methods is most appropriate in a hyperinflationary economy? The:
A) current/non-current method since current assets and liabilities are translated at the current exchange rate. B) temporal method because all non-monetary accounts are translated at the historical rate. C) all-current method since the translation gain or loss is shown on the income statement.
Q23. Which of the following statements regarding foreign currency disclosures in the footnotes to financial statements is most
accurate? A) A multinational firm with small liability balances generally has minimal foreign currency exposure on its balance sheet. B) All U.S.-based multinational firms must disclose the accounting method used for foreign currency translation in order to be in compliance with GAAP standards. C) If the parent currency is the functional currency, the temporal method is applied and exposure is equal to net monetary assets.
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发表于 2009-1-17 15:02
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