Fundamentals of Advanced Accounting
6th Edition
ISBN: 9780077862237
Author: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupnik
Publisher: McGraw-Hill Education
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Question
Chapter 8, Problem 9Q
To determine
How the translation adjustment figure is completed and where is the amount reported in the financial statements.
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How to translate a foreign subsidiary’s financial statements into its parent’s reporting currency using the current rate method and calculate the related translation adjustment?
Which translation method results in a set of financial statements as if the foreign subsidiary’s transactions were carried out in US dollars?
Current rate method
Temporal method
In accordance with U.S. generally accepted accounting principles, which translation combination is appropriate for a foreign operation whose functional currency is the U.S. dollar?
Chapter 8 Solutions
Fundamentals of Advanced Accounting
Ch. 8 - Prob. 1QCh. 8 - What causes balance sheet (or translation)...Ch. 8 - Prob. 3QCh. 8 - Prob. 4QCh. 8 - Prob. 5QCh. 8 - Prob. 6QCh. 8 - Prob. 7QCh. 8 - Prob. 8QCh. 8 - Prob. 9QCh. 8 - Prob. 10Q
Ch. 8 - Prob. 11QCh. 8 - Which translation method does U.S. GAAP require...Ch. 8 - Prob. 13QCh. 8 - Prob. 1PCh. 8 - Prob. 2PCh. 8 - Prob. 3PCh. 8 - Prob. 4PCh. 8 - Prob. 5PCh. 8 - Prob. 6PCh. 8 - Prob. 7PCh. 8 - Prob. 8PCh. 8 - Prob. 9PCh. 8 - Prob. 10PCh. 8 - Prob. 11PCh. 8 - Prob. 12PCh. 8 - Prob. 13PCh. 8 - Prob. 14PCh. 8 - Prob. 15PCh. 8 - Prob. 16PCh. 8 - Prob. 17PCh. 8 - A foreign subsidiarys functional currency is its...Ch. 8 - Prob. 19PCh. 8 - Prob. 20PCh. 8 - Prob. 21PCh. 8 - Prob. 22PCh. 8 - Prob. 23PCh. 8 - Prob. 24PCh. 8 - Prob. 25PCh. 8 - Prob. 26PCh. 8 - Prob. 27PCh. 8 - Prob. 28PCh. 8 - Prob. 29PCh. 8 - Prob. 30PCh. 8 - Prob. 31PCh. 8 - Prob. 32PCh. 8 - Prob. 33PCh. 8 - Prob. 34PCh. 8 - Prob. 35PCh. 8 - Prob. 36PCh. 8 - Prob. 37PCh. 8 - Prob. 38PCh. 8 - Prob. 1DYSCh. 8 - Prob. 2DYSCh. 8 - Prob. 3DYSCh. 8 - Prob. 4DYSCh. 8 - Prob. 5DYS
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Similar questions
- In which of the following cases in a translation adjustment necessary? Notes to financial statements are converted from one currency to another Preparation of consolidated financial statements Hedging of foreign currency Foreign currency financial statements are converted to another currencyarrow_forwardExchange differences arising from the translation of financial statements of a foreign operation shall be accounted for as: (using the temporal method) Translation gain or loss as component of other comprehensive income Translation gain or loss as component of profit or loss As valuation adjustment on the company's retained earnings Netted to the balance of foreign exchange gain or lossarrow_forwardExchange differences arising from the translation of financial statements of a foreign operation shall be accounted for as: (using the closing rate method method) Translation gain or loss as component of other comprehensive income Translation gain or loss as component of profit or loss As valuation adjustment on the company's retained earnings O Netted to the balance of foreign exchange gain or lossarrow_forward
- Assuming that the functional currency of a foreign subsidiary is the local currency, which of the following accounts would be translated at the current rate on the Balance Sheet date (B/S Rate)? a.Additional Paid-In Capital b.Cost of Goods Sold c.Retained Earnings d.Allowance for Doubtful Accountsarrow_forwardIn accordance with U.S. generally accepted accounting principles, which translation combination is appropriate for a foreign operation whose functional currency is the U.S. dollar? Choose the correct option. Method Treatmemt of transition adjustment a. Current rate other comprehensive income b. Current rate Gain or loss in net income c. Temporal other comprehensive income d. Temporal Gain or loss in net incomearrow_forwardwhat are implications for analysis of financial statements that result from the accounting for foreign currency translation?arrow_forward
- Exchange difference arising from the translation of financial statements of a foreign operation into the presentation currency of the reporting entity shall be accounted for as Group of answer choices Translation gain or loss as a component of profit or loss Transaction gain or loss as component of other comprehensive income Translation gain or loss as a component of other comprehensive income Transaction gain or loss as component of profit or lossarrow_forwardIn presenting foreign currency denominated transactions to the functional currency of the entity, which of the following statements is correct? a. When nonmonetary items are translated from foreign currency to functional currency in the financial statements, foreign currency gain of loss will be recognized. b. Monetary items shall be initially recognized and measured at the exchange rate prevailing at the end of the reporting period. c. Foreign currency gain or loss arising from translation of the foreign currency denominated items to functional currency shall be presented in other comprehensive income with reclassification adjustment to profit or loss if realized. d. Foreign currency denominated income statement accounts shall be translated using the exchange rate at the date of transaction.arrow_forwardWhen are foreign currency transaction gains or losses required to be recognized in the financial statements, how are they to be disclosed and where in the financial statements?arrow_forward
- which shall be recognized for each item when foreign currency gain or loss that arises from translation of foreign currency denominated transaction to functional currency? a. inventiry b. interest expense c. accounts receivable d. unearned revenuearrow_forwardHow should exchange gains or losses resulting from foreign currency transactions be accounted for? Included as component of income from continuing operations for the period in which the rate changes. Included as component of other comprehensive income for the period in which the rate changes. Included in the statement of financial position as a deferred item. Included in net earnings for gains, but deferred for losses.arrow_forwardExplain the following a) Gain or losses on foreign exchange translations. b )Recording of previous periods errors in revenue and expenditure after preparation of final accounts in the current periods.arrow_forward
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