上海对外经贸大学 高级财务会计学笔记-高级财务会计学（英）chapter 14.pdfVIP

AdvancedAccounting,12e(Beamsetal.)

Chapter14ForeignCurrencyFinancialStatements

14.1MultipleChoiceQuestions

1)AU.S.firmhasaBelgiansubsidiarythatusestheBritishpoundasitsfunctionalcurrency.According

toGAAP,theU.S.dollarfromBelgianunitspointofviewwillbe

A)itsonlyforeigncurrency.

B)itslocalcurrency.

C)itscurrentratemethodcurrency.

D)itsreportingcurrency.

Answer:D

Objective:LO1

Difficulty:Easy

2)SelveyInc.isawholly-ownedsubsidiaryofParsfieldIncorporated,aU.S.firm.Thecountrywhere

SelveyoperatesisdeterminedtohaveahighlyinflationaryeconomyaccordingtoGAAPdefinitions.

Therefore,forpurposesofpreparingconsolidatedfinancialstatements,thefunctionalcurrencyis

A)itsreportingcurrency.

B)itscurrentratemethodcurrency.

C)theUSdollar.

D)itslocalcurrency.

Answer:C

Explanation:C)Selveymustusethefunctionalcurrencyofthereportingentity.

Objective:LO3

Difficulty:Easy

3)Allofthefollowingfactorswouldbeusedtodefineaforeignentitysfunctionalcurrency,except

A)highvolumeofintercompanytransactions.

B)expensesforforeignentityprimarilydrivenbylocalfactors.

C)financingforforeignentitydenominatedinlocalcurrency.

D)foreignentitysstatusasalocaltaxhavenfortransferpricingpurposes.

Answer:D

Objective:LO1

Difficulty:Easy

4)Theprimarygoalbehindconsolidatingfinancialstatementsofacontrolledsubsidiaryis

A)assuringthatthesubsidiaryfinancialstatementsarethesameunderthetemporalmethodorthe

currentratemethod.

B)assuringthattheindividualnatureofthesubsidiaryentityisnotlostintheconsolidation.

C)representingtheconversionofstatementsatthehistoricalexchangerate.

D)representingthecompanysunderlyingeconomiccondition.

Answer:D

Objective:LO2

Difficulty:Easy