Q88. 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: Beginning of year | $0.5902 | Average throughout the year | $0.6002 | End of year | $0.6150 |
The SF-based balance sheet and income statement data for the Swiss subsidiary are as follows: Accounts receivable
| = 3,000
| Inventory
| = 4,000
| Fixed assets | = 12,000 | Accounts payable | = 2,000 | Long-term debt | = 5,000 | Common stock | = 10,000 | Retained earnings | = 2,000 | Net income | = 2,000 |
The translated value of accounts receivable and inventory respectively are: A) $1,845 and $2,460. B) $1,801 and $2,401. C) $1,845 and $2,401.
Q89. Which of the following statements is most accurate concerning foreign currency translation?
A) In the case of an appreciating currency, the fixed asset turnover will be lower under the temporal method, as compared to the current rate method. B) The receivables turnover ratio is identical under both the temporal method and the current rate method. C) In the case in which a firm uses first in, first out (FIFO) inventory valuation, if the local currency appreciates the cost of good sold under the temporal method is less than the cost of goods sold using the current rate method.
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发表于 2009-1-20 13:17
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