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Solutions for Chapter 8 - Advanced Financial Accounting 1st edition by Nathalie Johnstone
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Solutions for Chapter 8 - Advanced Financial Accounting 1st edition by Nathalie Johnstone
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Solutions for Chapter 8 - AdvancedFinancial Accounting 1st edition by
Nathalie Johnstone
The accounts of a foreign subsidiary are translated into the parent's currency using a
combination of - ANScurrent and historical exchange rates.
Translating a foreign currency asset at the current exchange rate when the foreign currency has
appreciated gives rise to a ________ translation adjustment. - ANSpositive
Foreign currency balance sheet accounts that are translated at the current exchange rate are
_____ to translation adjustment. - ANSexposed
When the amount of assets translated at the current exchange rate is lower than the amount of
liabilities translated at the current exchange rate - ANSa net liability balance sheet exposure
exists.
A net liability balance sheet exposure coupled with an appreciation in the value of a foreign
currency will result in a ______ translation adjustment. - ANSnegative
The _____ exchange rate is the exchange rate that exists at the balance sheet date. -
ANScurrent
Translating a liability on a foreign subsidiary's balance sheet at the current exchange rate results
in - ANSa positive translation adjustment when the foreign currency has depreciated.
a negative translation adjustment when the foreign currency has appreciated.
Exposure to translation adjustment exists for those foreign currency balances that are translated
at - ANSthe current exchange rate.
A net asset balance sheet exposure exists when - ANSthe amount of assets translated at the
current exchange rate is higher than the amount of liabilities translated at the current exchange
rate.
A depreciation in the value of a foreign currency will result in a negative translation adjustment
when a foreign subsidiary has a net _____ balance sheet exposure. - ANSasset
The _____ exchange rate is the exchange rate that existed when a transaction occurred
sometime in the past. - ANShistorical
, Translating an asset on a foreign subsidiary's balance sheet at the current exchange rate results
in - ANSa positive translation adjustment when the foreign currency has appreciated.
a negative translation adjustment when the foreign currency has depreciated.
Translating a foreign currency balance sheet account at the current exchange rate gives rise to -
ANSbalance sheet exposure to foreign exchange risk.
A net asset balance sheet exposure will generate a positive translation adjustment when the
foreign currency - ANSincreases (appreciates) in value.
The current rate method of translation assumes that a foreign subsidiary is - ANSa net asset
that is exposed to foreign exchange risk.
Under the current rate method of translation, the balance sheet items translated at the current
exchange rate are - ANSall assets and all liabilities.
The translation adjustment arising under the current rate method becomes a realized (cash)
gain or loss when - ANSa foreign subsidiary is sold and the sales proceeds are converted into
parent company currency.
A positive translation adjustment will arise when a foreign currency decreases in value
(depreciates) and the foreign subsidiary - ANShas a net liability balance sheet exposure.
Under the current rate method of translation, revenues and expenses generally are translated at
- ANSthe average-for-the-period exchange rate.
A basic objective of the temporal method of translation is to - ANSproduce a set of translated
financial statements as if the foreign operation had used the parent company's currency in its
daily operations.
Consistent with the underlying assumption of the current rate method that the net investment in
a foreign operation is exposed to foreign exchange risk, all assets and liabilities of the foreign
operation are translated into parent company currency using the exchange rate. - ANScurrent
Under the current rate method of translation, - ANSall assets are translated at the current
exchange rate.
The translation adjustment arising under the current rate method becomes a realized gain or
loss when the foreign subsidiary is sold and the foreign currency proceeds from the sale are
_____ into U.S. dollars. - ANSconverted
Sales revenue recognized evenly throughout the year by a foreign subsidiary should be
translated under the current rate method using the - ANSaverage-for-the-period exchange rate.
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