7 After translating Consol - Con\'s inventory and long-term debt into the parent

Question

7 After   translating Consol - Con's inventory and long-term debt into the parent   currency (US$), the amounts reported on consolidated motors
financial statements at 31 December   2007 would be closest to (in million)






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 - Con'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 first   question, Templeton should reply that such a change would be most justified   if:



A. the inflatio0n rate int the   united states became hyperinflationary.







B.   Management wanted to flow more of the gains through net income







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


















10 In response to the Board's  second question , Templeton should note   that if the change is made, the consolidated financial:


statements for consolidated Motors   would begin to recognize:







A. Realized gains and losses on   monetary assets and liabilities







A. Realized gains and losses on   nonmonetary assets and liabilities







C.     Unrealized gains and losses on nonmonetary assets and liabilities





















11 In response to the Board's  third question , Templeton should note that   the change will most likely affect:



A. The cahs ratio












B. fixed asset turnover











C.   Receivables turnover

























12 In response to the Board's  fourth question , the balance sheet   exposure (in C$ million) 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 US 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












C. both Julius and Augustus

























15 When Romulus consolidates the   results of Julius, any unrealized exchangerate 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 tranlates his forecasted   balance sheet for Julius into the US dollars, total assets at 31 December   2008 (dollarsin millions)will closest to:
A. $1,429













B. $2,392













C. 3,703



























17 When Marks coonverts his forecasted   income statement data int US dollars, the 2008 gross profit margin for Julius   will be closest to:

A. 39.1%













B. 40.9%













C. 44.6%



























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   translation and inventory accounting methods Augustus is using



















19 Compared to using the Singapore   dollar as Acceletron's funtional currency for 2007, if the us dollar were the   functional currency

it is most likely that Redline's   consolidated:









A. inventories will be higher











B. receivable turnover will be lower










C. fixed asset turnoverwill be   higher
























20 If the US dollar were chosen as the   functional currency for Acceleton' in 2007, Redline could reduce its balance   sheet exposure to exchange rates by
A. selling SGD 30 of fixed assets   for cash










B. Issuing SGD 30 of long -term debt   to buy fixed assets








C. Issuing SGD 30 in short-term debt   to purchase marketable securities





















21 Redlin's consolidated gros  profit margin for 2007 would be highest if   Acceletron accounted for inventory using



A. FIFOand its funtional currency   were the US dollar








B. LIFO and ists functional currency   were the US dollar








C. FIFO, and its functional currency   were the Singapore dollar






















22 If the current rate method is used   to translate Acceletron's financial statements into US dollars, Redlin's   consolidated financial statements will
most likely include Acceletron:










A. $3,178 in revenue











B. $118 in long-term debt











C. Negative translation adjustment   to shareholder equity





































23 If Acceletron's financial   statements are translated into US dollars using the temporal method,   Redline's consolidated financial statements
will most likely include   Acceletron's:










A. $336 in inventory











B.$ 956 in fixed assets











C. $152 in accounts receivable

























24 When translating acceletron's   financial statements into US dollars, Redline is least likely to use an   exchange rate of USD per SGD

A. 0.671













B. 0.588













C. 0.654

Explanation / Answer

7)B

8)B

9)A

10)A

11)A

12)C

13)B

14)C

15)C

16)C

17)B

18)B

19)A

20)C

21)B

22)C

23)B

24)C

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