B. a subtraction from the cumulative translation adjustment.

C. a translation gain or loss as a component of net income.

7. After translating Consol - Can ’ s inventory and long - term debt into the parent currency

(US$), the amounts reported on Consolidated Motor ’ s fi nancial statements at 31

December 2007 would be closest to (in millions)

A. $71 for inventory and $161 for long - term debt.

B. $71 for inventory and $166 for long - term debt.

C. $73 for inventory and $166 for long - term debt.

8. After translating Consol - Can ’ s 31 December 2007 balance sheet into the parent currency,

the translated value of retained earnings will be closest to

A. $41 million.

B. $44 million.

C. $46 million.

9. In response to the Board ’ s fi rst question, Templeton should reply that such a change

would be most justifi ed if

A. the infl ation rate in the United States became hyperinfl ationary.

B. management wanted to fl ow more of the gains through net income.

C. Consol - Can were making autonomous decisions about operations, investing, and

Fi nancing.

10. In response to the Board ’ s second question, Templeton should note that if the change

is made, the consolidated fi nancial statements for Consolidated Motors would begin to

recognize

A. realized gains and losses on monetary assets and liabilities.

B. realized gains and losses on non - monetary assets and liabilities.

C. unrealized gains and losses on non - monetary assets and liabilities.

11. In response to the Board ’ s third question, Templeton should note that the change will

most likely affect

A. the cash ratio.

B. fi xed asset turnover.

C. receivables turnover.

12. In response to the Board ’ s fourth question, the balance sheet exposure (in millions)

would be closest to

A. _ 19.

B. 148.

C. 400.

13. Based on the translation method being used for Julius, the subsidiary is most likely

A. a sales outlet for Romulus ’ s products.

B. a self - contained, independent operating entity.

C. using the U.S. dollar as its functional currency.

14. To account for its foreign operations, Romulus has most likely designated the euro as the

functional currency for

A. Julius only.

B. Augustus only.

C. both Julius and Augustus.

15. When Romulus consolidates the results of Julius, any unrealized exchange rate holding

gains on monetary assets should be

A. reported as part of operating income.

B. reported as a nonoperating item on the income statement.

C. reported directly to equity as part of the cumulative translation adjustment.

16. When Marks translates his forecasted balance sheet for Julius into U.S. dollars, total

assets on 31 December 2008 (dollars in millions) will be closest to

A. $1,429.

B. $2,392.

C. $3,703.

17. When Marks converts his forecasted income statement data into U.S. dollars, the 2008

gross profi t margin for Julius will be closest to

A. 39.1 percent.

B. 40.9 percent.

C. 44.6 percent.

18. Relative to the gross margins the subsidiaries ’ report in local currency, Romulus ’ s consolidated

gross margin most likely

A. will not be distorted by currency translations.

B. would be distorted if Augustus were using the same translation method as Julius.

C. will be distorted due to the translation and inventory accounting methods Augustus

Is using.

19. Compared to using the Singapore dollar as Acceletron ’ s functional currency for 2007, if

the U.S. dollar were the functional currency it is most likely that Redline ’ s consolidated

A. inventories will be higher.

B. receivable turnover will be lower.

Date: 2016-03-03; view: 836