Advanced accounting second half

When other partners are unable to recover any part of an insolvent partner's deficit capital balance, the insolvent partner's capital account should be closed and the other partners' capital accounts should be

debited for each partner's share of the deficit.

Under the temporal method, cost of goods sold (COGS) in foreign currency (FC) is translated into parent company currency by

decomposing COGS in FC into components and then multiplying each of these components by its appropriate historical exchange rate.

A decrease in the direct quote in U.S. dollars for a foreign currency from one day to the next means that the foreign currency has ___ against the U.S. dollar.

depreciated

The amount recognized as cost of goods sold related to imported goods that are paid for in a foreign currency is

determined by the spot rate on the date of purchase with no further adjustments.

Any change in the set of specific individuals that comprise a partnership automatically leads to a legal

dissolution.

The procedures involved in terminating and liquidating a partnership include

distributing partnership cash to individual partners after partnership liabilities and liquidation expenses have been paid.

The functional currency of a foreign entity located in a highly inflationary country

does not need to be identified because the entity's foreign currency financial statements must be translated using the temporal method.

When an asset carried at historical cost on a foreign currency balance sheet is translated into parent company currency using the current rate method the resulting parent currency amount for that asset

does not represent either the historical cost nor the fair value of that asset in parent currency.

Because a Subchapter S corporation pays no income taxes, but passes its income through to the tax returns of the individual owners, it avoids taxation of its income.

double

Periodic cash withdrawals from the partnership by individual partners are recorded initially as a credit to cash and a debit to a

drawing account.

An objective of segment reporting is to provide information about the different

economic environments in which an enterprise operates.

Under the temporal method of translation, balance sheet accounts translated at historical exchange rates include

equipment, buildings, and land. common stock and additional paid-in capital.

In addition to accounting for the transactions that occur during a partnership liquidation, the partnership's accountant should work to ensure the ________ treatment of all parties involved in the liquidation.

equitable

A company with a December 31 year-end plans to pays its president a bonus at the end of December. The bonus will be based on the current year's year-to-date income at the time the bonus is paid. The company should

estimate the amount of bonus to be paid in December and recognize 1/4 of this amount as expense in the first quarter of the year.

The price at which foreign currency can be purchased with U.S. dollars is the _____ rate for that foreign currency.

exchange

In determining the translation adjustment when the current rate method is used, dividends declared by the foreign entity in the current year are translated using the

exchange rate on the date the dividends are declared.

Despite the notion that a partnership is an extension of its individual partners, a noncash asset contributed to the partnership should be recorded at its contribution-date value.

fair

Similar to initial partner contributions to begin a partnership, subsequent partner contributions to support ongoing operations or expansion should be credited to the contributing partner's capital account at value.

fair

A partner receives an amount in excess of his/her capital balance upon withdrawing from the partnership. A possible reason for the excess payment is that the partnership agreement calls for a revaluation of the partnership to its

fair value

A partner receives an amount in excess of his/her capital balance upon withdrawing from the partnership. A possible reason for the excess payment is that the partnership agreement calls for a revaluation of the partnership to its .

fair value

A partner contributes a building to her partnership that has appreciated in value. The the partnership's valuation basis for the building should be

fair value.

According to the Internal Revenue Code, partnership income

flows through to the individual tax returns of the individual partners.

A U.S.-based company has a foreign subsidiary. The functional currency of the foreign subsidiary can be either the U.S. dollar or a ___ currency.

foreign

The _____ , exchange rate is the price today at which a foreign currency can be purchased or sold at a specific date in the future.

forward

The primary currency of a foreign entity's operating environment is its currency.

functional

The appreciation of a foreign currency will result in an exporter recognizing a foreign exchange when it makes a foreign currency sale to a foreign customer and receives payment after the date of sale.

gain

The depreciation of a foreign currency will result in an importer recognizing a foreign exchange ______ , Incorrect Unavailable when it makes a purchase from a foreign supplier and pays the supplier in foreign currency after the date of purchase.

gain

The criteria that must be met for a component of an enterprise to be identified as an operating segment are that it

has discrete financial information available. generates revenues and incurs expenses. is regularly reviewed by the chief operating decision maker.

A limited partnership (LP)

has general partners who are designated to assume responsibility for all partnership debts. has investors whose liability may be limited to the amount they have invested in the partnership. often has investors that are not allowed to participate in the management of the partnership.

A partner with a negative capital balance should make a contribution to the partnership in an amount equal to

hat partner's negative capital balance.

Operating segments that are individually significant and otherwise separately reportable may be combined if they

have essentially the same business activities in essentially the same business environments.

The exchange rate is the exchange rate that existed when a transaction occurred sometime in the past.

historical

Under the temporal method, cost of goods sold (COGS) in foreign currency is decomposed into beginning inventory, purchases, and ending inventory and then each component is translated into U.S. dollars using the appropriate exchange rate.

historical

Under the temporal method, depreciation expense and accumulated depreciation are translated using ____ the exchange rate when the related property, plant, and equipment was acquired.

historical

The accounting system must keep track of the acquisition date exchange rates related to those assets that are translated at

historical exchange rates under the temporal method.

Under the temporal method of translation, assets carried on the foreign entity's balance sheet at historical cost are translated using

historical exchange rates.

Among common methods to account for the withdrawal of a partner from a partnership include the

hybrid (revaluation/bonus) method. bonus method. goodwill method.

Conceptually, translation adjustments that result from applying either the current rate method or the temporal method could be

included in consolidated other comprehensive income as a deferred translation gain or loss. included in consolidated net income as a translation gain or loss.

A statement of partnership liquidation should include several columns of information that show changes in

individual partners' capital accounts. partnership liabilities. partnership cash.

Partnership capital contributions often include

intangible asset contributions. cash. tangible asset contributions.

The premium paid to acquire a foreign currency option is determined by adding together the option's value and its time value.

intrinsic

At the time of the termination of the ABCD partnership, Partner A and Partner B have negative capital balances, and Partner A is personally insolvent. After Partner A's deficit capital balance is written-off, the balance in Partner B's capital account

is a larger negative amount.

A limited liability company (LLC)

is classified as a partnership for tax purposes. with respect to partner liability is similar to a Subchapter S corporation. in many states limits a partner's risk to the amount he or she has invested in the partnership.

At year end, a partner's drawing account

is closed to the partner's capital account.

The forward rate for the purchase of foreign currency that will be settled in three months on October 31

is likely to change between the current date and the future settlement date.

The articles of partnership document

largely determines the accounting procedures followed for the partnership. is a negotiated agreement created by the partners. represents a legal agreement that governs the operation of the partnership.

A limited partnership helps the individual partners protect their personal financial position through the avoidance of unlimited from the partnership

liability

The emergence of several alternative partnership forms derives from the desire to avoid double taxation and

limit the personal liability exposure of individual partners.

A limited liability partnership (LLP)

limits the partners' individual liabilities resulting from damages awarded by a court. is a popular organizational form for major public accounting firms. does not limit individual partner's liability arising from contractual obligations of the partnership.

A statement of partnership liquidation discloses

liquidation transactions already carried out.

The depreciation of a foreign currency will result in an exporter recognizing a foreign exchange when it makes a foreign currency sale to a foreign customer and receives payment after the date of sale.

loss

During a partnership liquidation, debits are made to individual partners' capital accounts to recognize each partner's share of

losses on sales of partnership assets

A company using LIFO to account for inventory sells more units of product in the first quarter of the year than it produces, which results in a LIFO liquidation. However, by the end of the year, the company expects there to be no LIFO liquidation. In preparing its first quarter financial statements the company should

make an adjustment to cost of goods sold to offset the effect of the LIFO liquidation.

ABC Company owns four restaurants that serve breakfast sandwiches in four different cities. The economic environment in the four cities is similar, but each restaurant meets the definition of an operating segment. ABC Company

may combine the four restaurants into one reportable segment.

In addition to accounting for the transactions that transpire during a partnership liquidation, the partnership's accountant

might be asked to make recommendations regarding the distribution of partnership funds. should work to make sure that all parties involved in the liquidation are treated equitably.

The foreign currency financial statements of a foreign entity located in a highly inflationary economy

must be translated using the temporal method.

Under the bonus method for recognizing a partner's intangible contribution

no asset is recorded; only partners' capital accounts are affected.

Partners might decide to terminate their partnership because they

no longer wish to work together. believe profits have become inadequate to justify their continued investment.

A foreign currency call option gives the holder of the option the right but not the to buy foreign currency in the future at a predetermined price

obligation or commitment

At the time of partnership termination, Partner A is personally insolvent and has a negative capital balance. Partners B and C must absorb A's deficit

on the basis of their respective profit and loss ratios.

The negative (deficit) balance in a partner's capital account is closed to zero

only upon final resolution of the amount, if any, the partner will contribute to the partnership to offset the deficit capital balance.

A component of an enterprise that recognizes revenues and expenses, is regularly reviewed by the chief operating decision maker, and has discrete financial information is a(n) ____ segment.

operating

The parties most interested in the financial information produced during a partnership liquidation are the partnership's

partners and creditors.

Receiving a statement of partnership liquidation on a frequent basis can be of value to

partners and partnership creditors.

A statement of partnership liquidation reports updated balances in the partnership's assets, liabilities, and

partners' capital accounts.

Liquidation expenses are allocated to individual partners' capital accounts on the basis of

partners' relative profit and loss ratios.

According to the Uniform Partnership Act, an obligation of a limited liability partnership arising from a contract is solely the obligation of the

partnership

The ending balances in individual partners' capital accounts is the basis for allocating

partnership cash that remains after payment of partnership liabilities.

If the articles of partnership are silent with regard to partnership income distribution to the individual partners, then

partnership income is allocated equally among all partners.

Accounting for a partnership's owners' equity tends to be much less complex than for a corporation because

partnerships tend to be smaller and have less complex equity transactions than corporations. government regulations require greater disclosures for corporations to protect the investing public and others

A transaction exposure to foreign exchange risk exists when an importer

pays for its purchases using a foreign currency and pays for its imported purchases on a future date.

Translating a foreign currency asset at the current exchange rate when the foreign currency has appreciated gives rise to a _____ translation adjustment.

positive

Translating a foreign currency asset at the current exchange rate when the foreign currency has appreciated gives rise to a translation adjustment.

positive

The functional currency of a foreign entity is defined as the

primary currency of the foreign entity's operating environment.

A Subchapter S Corporation

provides limited liability to its owners. must have only one class of stock. is taxed in the same way as a partnership.

A foreign currency option giving its holder the right to sell foreign currency in the future at a predetermined price is a

put option.

When the temporal method of translation is appropriate, the resulting translation adjustment must be

recognized as a gain or loss in net income.

An unrealized foreign exchange loss on a foreign currency account receivable that results from a depreciation in the foreign currency from the date of sale to the balance sheet date is

recognized in net income.

An unrealized foreign exchange gain on a foreign currency account receivable that results from an appreciation in the foreign currency from the date of sale to the balance sheet date is

recognized net income

Gains and losses incurred from the sale of assets during a partnership liquidation are

recorded directly in partners' capital accounts rather than being recognized as gains and losses in net income.

After liquidating all partnership assets and paying partnership obligations, the final entry made in accounting for a partnership liquidation serves to

reduce each partner's capital account to a zero balance.

Under the bonus method any excess payment to a withdrawing partner beyond his/her capital balance

reduces the capital balances of the remaining partners.

When the current rate method of translation is appropriate, the resulting translation adjustment must be

reported in accumulated other comprehensive income on the balance sheet.

When an asset carried at historical cost on a foreign currency balance sheet is remeasured into parent company currency using the temporal method the resulting parent currency balance for that asset

represents the historical cost of the asset in parent currency.

A partner's negative capital balance remains on the partnership's books until there is a final ____ of that partner's deficit

resolution

Accounting methods for formally recording the admission of a new partner include

retaining the partnership book value through the bonus method. revaluing existing partnership assets to fair value without recognizing goodwill. revaluing existing partnership assets to fair value and recognizing goodwill.

A company makes an accounting change in the third quarter of the current year. That change must be applied to the first and second quarters of the year.

retrospectively

The amount that can be distributed to an individual partner during the liquidation process while ensuring that partner has a safe capital balance can be referred to as a _______ payment.

safe

When making distributions of cash to partners during the liquidation process, the accountant must ensure that each partner has a _____ capital balance, which is the minimum amount that a partner must retain in their capital account to be able to absorb future losses.

safe

When making distributions of cash to partners during the liquidation process, the accountant must ensure that each partner has a _______ capital balance, which is the minimum amount that a partner must retain in their capital account to be able to absorb future losses.

safe

A safe payment is the amount that can be distributed to an individual partner during the liquidation process while ensuring that the partner's capital account maintains a

safe balance.

A toy manufacturing company makes more than one-half of its annual sales in the fourth quarter of the year when customers place orders for the holiday season. In accordance with FASB ASC 270, the company must disclose the nature of its business operations.

seasonal

The objective of _____ reporting is to provide information about an enterprise's different business activities and operating environments.

segment

A foreign currency put option gives the option holder the right to

sell foreign currency at a predetermined price.

he procedures involved in terminating and liquidating a partnership include

selling partnership assets to convert them into cash.

Comparability of financial statements across companies within an industry is made more difficult by

some companies identifying local currencies as functional currency and other companies identifying the U.S. dollar as functional currency.

Current U.S. GAAP recognizes that

some foreign entities are relatively self-contained and are integrated with the local economy. some foreign entities are closely integrated with their parent company.

The current or ______ exchange rate is the price at which a foreign currency can be purchased or sold today.

spot

The current or exchange rate is the price at which a foreign currency can be purchased or sold today.

spot

The price at which the holder of a foreign currency option can trade foreign currency at an agreed upon date in the future is the

strike price.

Under the temporal method, a gain on the sale of land in foreign currency (FC) is translated into parent company currency by multiplying the cash proceeds from the sale in FC by the exchange rate in effect on the date of sale and

subtracting the product of multiplying the cost of the land in FC by the exchange rate in effect when the land was acquired.

Alternative legal forms of partnerships have been provided in many state laws that both limit the liability of individual partners while maintaining the benefits of the partnership form of business organization.

tax

Partnerships often serve as a preferred organization form for businesses compared to the corporate form because

tax benefits exist for partnerships relative to corporations. partnerships are easier and less costly to form than corporations. some state regulations prevent doctors and attorneys from forming corporations.

An operating segment is significant if its total revenues are _____ percent or more of the combined total revenues of all reported operating segments.

ten

A partner's safe capital balance is the amount

that must remain in that partner's capital account to absorb any future losses.

When a partner has a negative capital balance, but is personally solvent,

that partner makes a capital contribution to the partnership.

The Canadian subsidiary of a U.S.-based company has an account receivable in British pounds. To report this account receivable in the U.S.-parent's consolidated balance sheet, the

the Canadian dollar translated amount for the British pound receivable should be translated into U.S. dollars using the current exchange rate. British pound receivable should translated into Canadian dollars using the current exchange rate.

Included in the advantages of the partnership form of business organization are

the ability to make any arrangement desired among the partners for income distribution and control of business decision making. a lower cost of formation compared to the corporate form. ease of formation.

Under the temporal method, expenses are translated using

the average-for-the-year and historical exchange rates.

Under the temporal method, revenues that are earned evenly throughout the year are translated using

the average-for-the-year exchange rate.

In calculating the translation adjustment when the current rate method is used, the focus is on determining the impact that exchange rate changes have on

the beginning balance and changes in net assets.

A new partner exchanges a $20,000 cash payment to the partnership business for a 10% partnership ownership interest. Under the bonus method

the capital balance of the new partner will equal 10% of partnership net assets including the $20,000 cash payment. no revaluation of existing partnership assets takes place.

Exposure to translation adjustment exists for those foreign currency balances that are translated at

the current exchange rate.

Under the temporal method of translation, assets carried on the foreign entity's balance sheet at a current or future value are translated using

the current exchange rate.

Some of the ratios calculated from a foreign entity's foreign currency financial statements will have the same value in parent company currency when the foreign financial statements are translated using

the current rate method.

The intrinsic value of a put option to sell foreign currency is determined by the difference in the option's strike price and

the current spot rate for that foreign currency.

Accounting techniques for recognizing a partner's contribution of a special valuable talent to a partnership include

the goodwill method. the bonus method.

When a new partner is admitted to a partnership as a result of a cash transaction between individual parties,

the new partner's admission has no impact on partnership tangible assets and liabilities. the transfer of ownership may be recorded by a capital reclassification from the current partners to the new partner.

A safe payment is the amount that can be distributed to an individual partner during the liquidation process while ensuring that future liquidation transactions cannot result in

the partner having a deficit capital balance.

Any partnership cash remaining after the payment of partnership liabilities and liquidation expenses is distributed to individual partners based upon

the partners' ending capital account balances

One reason why partners might decide to terminate their partnership is that

the partnership is not successful enough to adequately compensate partners for their time and capital investment. partners disagree over how the partnership should continue to operate.

Typically included in an articles of partnership agreement are

the procedures for admitting a new partner. the rights and responsibilities of each partner. how to distribute the profits and losses of the partnership.

Included in rights that a partner can convey in a transfer of ownership are

the right of co-ownership of the partnership business property. the rights to share in the profits and losses of the partnership. the right to participate in the management of the business if agreed upon by by all other partners.

The methods used in valuing assets on the foreign currency financial statements of a foreign entity are maintained in the translated parent company currency financial statements when

the temporal method is used to translate the foreign financial statements.

Each of the ratios calculated from a foreign entity's foreign currency financial statements will have a different value in parent company currency when the foreign financial statements are translated using

the temporal method.

When a company allows a foreign customer to pay in a foreign currency and allows the customer time to pay for its purchases the company has a exposure to foreign exchange risk.

transaction

A company is able to enter into a forward contract with its bank for a wide variety of foreign currencies.

true

Net cash from operations reported in the translated statement of cash flows will be the same regardless of whether a foreign entity's financial statements have been translated using the current rate method or remeasured using the temporal method.

true

The ending balances in individual partners' capital accounts determines the amount of partnership cash that will be distributed to each partner upon termination of the partnership.

true

True or false: An advantage of a limited liability company (LLC) is that the number of owners is not restricted.

true

True or false: Individual partners can be held personally liable for all partnership obligations.

true

True or false: Upon a partner's withdrawal from a partnership, the resulting distribution will unlikely equal the balance in the partner's capital account.

true

Compared to a corporation's balance sheet, the owners' equity section of a partnership

typically consists of solely partner's capital accounts. does not usually distinguish between contributed and earned capital. typically provides a much more limited range of information.

Foreign exchange gains and losses that arise from revaluing foreign currency balances at the balance sheet date are

unrealized but recognized as a component of net income.

The procedures involved in terminating and liquidating a partnership include

using cash from the sale of partnership assets to pay off partnership liabilities. using cash from the sale of partnership assets to pay any expenses incurred in the liquidation process.

Under the temporal method, depreciation expense and accumulated depreciation on property, plant, and equipment are translated

using the historical exchange rate when the property, plant, and equipment was acquired.

Net cash from operations reported in the translated statement of cash flows

will be the same regardless of whether the current rate method or temporal method is used.

The final accounting entry in a partnership liquidation reduces each partner's capital account to a balance of

zero

The current spot rate to sell a foreign currency is $1.00. The intrinsic value of an option to sell that foreign currency at a strike price of $0.90 is

zero; the option has no intrinsic value.

The up-front price a company pays its bank to enter into a foreign currency forward contract is

zero; there is no up-front cost to enter into a forward contract.

Brief, Inc., had a receivable from a foreign customer that is payable in the customer's local currency. On December 31, 2020, Brief correctly included this receivable for 255,000 local currency units (LCU) in its balance sheet at $165,000. When Brief collected the receivable on February 15, 2021, the U.S. dollar equivalent was $177,900. In Brief's 2021 consolidated income statement, how much should it report as a foreign exchange gain?

$12,900

On March 15, Calloway, Inc., paid property taxes of $530,000 for the calendar year. How much of this expense should Calloway's income statement reflect for the quarter ending March 31?

$132,500 = 530,000/4

Rouge Company's $256,000 net income for the quarter ended September 30 included the following after-tax items: A $32,000 cumulative effect loss resulting from a change in inventory valuation method made on September 1. $0 of the $66,000 annual property taxes paid on February 1. For the quarter ended September 30, the amount of net income that Rouge should report is

$271,500.

In March of the current year, Mooney Company estimated its year-end executive bonuses to be $1,120,000. The executive bonus paid in the previous year was $1,010,000. What amount of bonus expense, if any, should Mooney recognize in determining net income for the first quarter of the current calendar year?

$280,000. = 1,120,000x 1/4

For interim financial reporting, a gain from the sale of land occurring in the second quarter should be

Recognized in the second quarter.

Plume Company has a paper products operating segment. Which of the following items does it not have to report for this segment?

Research and development expense

Under current U.S. accounting guidelines, which of the following items of information is a company not required to disclose, even if it were material in amount?

Revenues generated from export sales

What is a subsidiary's functional currency?

The currency in which the entity primarily generates and expends cash

Individual C is admitted with a 30% interest to the AB partnership in exchange for $50,000 cash paid to partners A and B. Why might C receive a capital credit for less that the $50,000 cash payment?

The partnership employed a book value approach where each partner transferred 30% of their interest to C.The ownership transfer was recorded by reclassifying partial capital balances to A without any asset revaluation.The $50,000 was paid to the current partners, not the partnership.

How should material seasonal variations in revenue be reflected in interim financial statements?

The seasonal nature should be disclosed, and the interim report should be supplemented with a report on the 12-month period ended at the interim date for both the current and preceding years.

Translation adjustments included in other comprehensive income are

accumulated in a stockholders' equity account on the consolidated balance sheet.

A partnership has four partners, two of whom have negative capital balances and one of these is personally insolvent. When the personally insolvent partner's deficit capital balance is written off

all of the other partners absorb the loss.

The exchange rate mechanism for the U.S. dollar can best be described as being

allowed to float independently of central bank intervention.

A transaction exposure to foreign exchange risk exists when an exporter

allows a foreign customer to pay in a foreign currency and allows the customer time to pay for its purchases.

An increase in the direct quote in U.S. dollars for a foreign currency from one day to the next means that the foreign currency has increased or against the U.S. dollar.

appreciated

When the U.S. dollar price for a foreign currency increases from one day to the next, the foreign currency is said to have

appreciated against the U.S. dollar.

Current U.S. GAAP recognizes that some foreign entities

are relatively self-contained and integrated with the local economy and therefore primarily conduct business using foreign currency. are closely integrated with their parent company and therefore primarily conduct business using parent company currency.

There is no need to keep record of the acquisition date exchange rates related to

assets translated at the current exchange rate under the temporal method. assets translated under the current rate method.

When a balance sheet date falls between the date of a foreign currency denominated export sale and the date cash is collected on the foreign currency account receivable, the foreign currency account receivable is reported on the U.S. exporter's balance sheet

at a U.S. dollar amount to reflect the change in exchange rate since the date of sale.

A statement of partnership liquidation reports updated balances in the partnership's assets, liabilities, and capital accounts

at periodic intervals.

When the strike price for a foreign currency option is the same as the spot rate the foreign currency option is

at-the-money.

A U.S.-based company has a foreign subsidiary that has the Mexican peso as its functional currency. The Mexican subsidiary recognizes in its Mexican peso income statement a foreign exchange gain on a Colombian peso account receivable. In preparing its consolidated income statement, the U.S. parent company should translate the Mexican subsidiary's foreign exchange gain into U.S. dollars using the

average-for-the-year exchange rate between the Mexican peso and U.S. dollar.

Translating a foreign currency balance sheet account at the current exchange rate gives rise to

balance sheet exposure to foreign exchange risk.

In determining remeasurement gains and losses under the temporal method, the focus is on determining the impact that exchange rate changes have on the

beginning balance and changes in net monetary assets and liabilities.

In determining the remeasurement gain or loss that results when the temporal method is used, the beginning-of-the-year net monetary asset or liability position of the foreign entity is translated using the

beginning-of-the-year exchange rate.

In determining the translation adjustment when the current rate method is used, the foreign entity's net asset balance at the beginning of the year is translated using the

beginning-of-the-year exchange rate.

A partner brings valuable expertise to a partnership. The partnership records no asset for this expertise, but the contributing partner nonetheless receives an additional capital credit. By crediting this partners capital account, the partnership has employed the method.

bonus

Common approaches to recognizing intangible factors that a new partner may bring to a partnership include the and methods.

bonus and goodwill

Ways in which an individual can gain admission into a partnership include

buying an ownership interest directly from one or more existing partners. contributing intangible assets directly to the partnership. contributing tangible assets directly to the partnership.

In determining the amount to pay a partner upon withdrawal, the partnership employs current assessments for both land and goodwill, This payment therefore

can be accounted for using either the goodwill, bonus, or hybrid method.

When partners make cash contributions to a partnership, a credit to each individual partner's account records the contribution.

capital

Under the temporal method of translation, balance sheet accounts translated at the current exchange rate include

cash and receivables. accounts and notes payable.

Balance sheet accounts translated using the same exchange rate under both the current rate and temporal methods include

cash and receivables. additional paid in capital. long-term debt.

The gain on the sale of an asset is translated under the temporal method by first translating the received from the sale using the exchange rate on the date of sale.

cash or proceeds

An operating segment is reportable based upon the revenue test if its

combined external and internal (intersegment) revenues are 10% or more of combined external and internal revenue of all reported operating segments.

The use of different functional currencies by companies in the same industry distorts the intra-industry of ____ financial statements.

comparibility

Assuming that all expenses are incurred evenly throughout the year, those expenses translated using a different exchange rate under the current rate method than under the temporal method include

cost of goods sold. depreciation expense.

In a partnership liquidation, individual partners

could be asked to personally satisfy all of the partnership's liabilities.

When the temporal method of translation is used, inventory carried at foreign currency cost on the foreign entity's balance sheet under the lower of cost or net realizable value rule

could be carried at net realizable value in parent currency on the parent's consolidated balance sheet. could be carried at cost in parent currency on the parent's consolidated balance sheet.

Frequent statements of partnership liquidation allow both partners and partnership ______ to stay apprised of the liquidation process.

creditors

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.

current

The accounts of a foreign subsidiary are translated into the parent's currency using a combination of

current and historical exchange rates.

A statement of partnership liquidation discloses

current capital balances. partnership liabilities remaining to be paid. assets still held by the partnership.

Which of the following is a criterion for determining whether an operating segment is separately reportable?

Segment assets are 10 percent or more of combined segment assets.

The exchange rate today at which a foreign currency can be purchased or sold on a specific future date is the

forward rate.

Fill in the blank question. The foreign currency rate is the price at which one currency can be traded for another currency.

exchange

The price at which foreign currency can be purchased with U.S. dollars is the rate for that foreign currency.

exchange

The price at which foreign currency can be purchased with U.S. dollars is known as the

exchange rate.

Companies must disclose the seasonal nature of their business operations when they

experience a spike in sales volume in one specific quarter each year.

Foreign currency balance sheet accounts that are translated at the current exchange rate are to translation adjustment.

exposed

The difference between the spot rate and the forward rate for a foreign currency on a given date is called

forward points.

Balance sheet exposure under the current rate method of translation is equal to a foreign operation's

net asset position.

A foreign currency call option gives the holder of the option the right but not the _______ to buy foreign currency in the future at a predetermined price.

obligation

The difference between the forward rate and the spot rate for a foreign currency on a given date is called forward

points

On the date a foreign currency option is acquired, the time value of the option is always

positive

A foreign currency call option gives the holder of the option the

right but not the obligation to purchase foreign currency at a predetermined price.

The fair value of a foreign currency option is equal to the sum of its intrinsic value and its value.

time

The fair value of a foreign currency option is the sum of its intrinsic value and its

time value

True or false: The forward rate for a specific future settlement date always stays the same as the specific future settlement date gets closer in time.

false

The ________ exchange rate is the price today at which a foreign currency can be purchased or sold at a specific date in the future.

forward

Baton Company estimates that the amounts for total depreciation expense for the year ending December 31 will be $66,000 and for year-end bonuses to employees will be $132,000. What total amount of expense relating to these two items should Baton report in its quarterly income statement for the three months ended March 31?

$49,500.

When the forward rate for a foreign currency is higher than its spot rate on a given date the foreign currency is selling at

a premium in the forward market.

The value of the euro can best be described as being

allowed to float freely against other currencies.

Foreign currency payables and receivables must be at the balance sheet date to reflect changes in foreign exchange rates.

revalued

On March 15, Calloway, Inc., paid property taxes of $530,000 for the calendar year. The journal entry at March 15 to record the payment of property taxes would include which of the following?

A debit to Prepaid Property Taxes of $397,500

On July 1, 2020, Mifflin Company borrowed 220,000 euros from a foreign lender evidenced by an interest-bearing note due on July 1, 2021. The note is denominated in euros. The U.S. dollar equivalent of the note principal is as follows: DateAmountJuly 1, 2020 (date borrowed)$235,000December 31, 2020 (Mifflin's year-end) 228,100July 1, 2021 (date repaid) 214,600 In its 2021 income statement, what amount should Mifflin include as a foreign exchange gain or loss on the note?

$13,500 gain

On October 1, Tile Co., a U.S. company, purchased products from Azulejo, a Portuguese company, with payment due on December 1. If Tile's operating income included no foreign exchange gain or loss, the transaction could have

Been denominated in U.S. dollars.

Nottage Company has four separate operating segments: East West North SouthSales to outsiders$142,000 $90,500 $104,500 $86,500 Intersegment transfers 35,750 30,750 14,900 19,900 What revenue amount must one customer generate before it must be identified as a major customer?

42,340

When the U.S. dollar direct quote for the Chinese yuan is $0.20 per yuan, the indirect quote is

5 yuan per U.S. dollar.

Which of the following is not necessarily true for an operating segment?

An operating segment regularly generates a profit from its normal ongoing operations.

Which of the following items is required to be disclosed by geographic area?

Revenues from external customers

Which of the following information items with regard to a major customer must be disclosed?

The operating segment making sales to the major customer

For a U.S.-based company, which of the following would be an acceptable presentation of countries for providing information by geographic area?

United States, Mexico, Japan, Spain, All Other Countries

As time passes, the time value of a foreign currency option

decreases.

The number of U.S. dollars needed to purchase one unit of a foreign currency is the quote for that foreign currency.

direct

A company should estimate its annual tax rate in calculating income tax at the end of each interim period.

effective

The premium paid to acquire a foreign currency option is

equal to the sum of the option's intrinsic value and time value.

Which of the following does U.S. GAAP not consider to be an objective of segment reporting?

It helps users make comparisons between a segment of one enterprise and a similar segment of another enterprise.

In accounting for a foreign currency borrowing, both the note payable and any accrued interest payable on the note are

exposed to foreign exchange risk. revalued for changes in the foreign exchange rate.

A U.S. importer has a foreign currency-denominated import purchase. With regard to the difference in the amount of U.S. dollars that could have been paid on the date of purchase and the amount of U.S. dollars actually paid on the date of payment, the U.S. importer should recognize

a foreign exchange gain or loss in net income.

Translating an asset on a foreign subsidiary's balance sheet at the current exchange rate results in

a negative translation adjustment when the foreign currency has depreciated. a positive translation adjustment when the foreign currency has appreciated

Matthias Corp. had the following foreign currency transactions during 2020: Purchased merchandise from a foreign supplier on January 20 for the U.S. dollar equivalent of $68,400 and paid the invoice on April 20 at the U.S. dollar equivalent of $52,600. On September 1, borrowed the U.S. dollar equivalent of $310,000 evidenced by a note that is payable in the lender's local currency in one year. On December 31, the U.S. dollar equivalent of the principal amount was $330,000. In Matthias's 2020 income statement, what amount should be included as a net foreign exchange gain or loss?

$4,200 loss

A U.S. company's foreign subsidiary had these amounts in local currency units (LCU) in 2020: Cost of goods soldLCU5,710,000Beginning inventory 542,000Ending inventory 623,000 The average exchange rate during 2020 was $1.20 = LCU 1. The beginning inventory was acquired when the exchange rate was $1.00 = LCU 1. Ending inventory was acquired when the exchange rate was $1.30 = LCU 1. The exchange rate at December 31, 2020, was $1.35 = LCU 1. Assuming that the foreign country is highly inflationary, at what amount should the foreign subsidiary's cost of goods sold be reflected in the U.S. dollar income statement?

$6,681,300

ABC partnership shares profits and losses 20% to A, 30% to B, and 50% to C. If C retires from the partnership and receives a $10,000 bonus, the bonus reduces the capital balances of A and B by

40% to A and 60% to B.

Two partners (X and Y) have equal balances in their capital accounts and have agreed to share profits and losses on a 55:45 basis, respectively. When partnership assets are liquidated, partner Y's capital account will be increased for

45% of gains on sales of partnership assets.

Two partners (A and B) have equal balances in their capital accounts and have agreed to share profits and losses on a 60:40 basis, respectively. When partnership assets are liquidated, partner A's capital account will be reduced for

60% of losses on sales of partnership assets.

Two partners (L and M) have equal balances in their capital accounts and have agreed to share profits and losses on a 70:30 basis, respectively. When the partnership is liquidated, partner L's capital account will be reduced for

70% of liquidation expenses.

A foreign subsidiary of Thun Corporation has one asset (inventory) and no liabilities. The functional currency for this subsidiary is the yuan. The inventory was acquired for 100,000 yuan when the exchange rate was $0.16 = 1 yuan. Consolidated statements are to be produced, and the current exchange rate is $0.12 = 1 yuan. Which of the following statements is true for the consolidated financial statements?

A negative translation adjustment must be reported.

What are some partnership activities that are considered capital transactions?

Admission of a new partner. Allocation of partnership profits and losses. Retirement of a partner.

Some companies are organized and provide segment disclosures on the basis of geographic areas only. An example of such a company is

Apple

In considering interim financial reporting, how does current U.S. GAAP require that such reporting be viewed?

As reporting for an integral part of an annual period

Which of the following combinations correctly describes the relationship between foreign currency transactions, exchange rate changes, and foreign exchange gains and losses? Type of TransactionForeignCurrencyForeignExchange Gain or Loss a.Export sale AppreciatesLoss b.Import purchaseAppreciatesGain c.Import purchaseDepreciatesGain d.Export saleDepreciatesGain

Option C

Which of the following statements is not true under U.S. GAAP?

Companies must combine individual foreign countries into geographic areas to comply with the geographic area disclosure requirements.

Which of the following is not a reason for forming a partnership as opposed to a corporation for a new business?

Partnership income typically flows tax-free to the partners.

What information about revenues by geographic area should a company present?

Disclose separately the amount of sales to unaffiliated customers but not the amount of intra-entity sales between geographic areas.

Which of the following statements concerning FASB ASC 280 is true?

Does not require segment information to be reported in accordance with generally accepted accounting principles

Assume the articles of partnership specify that profits are to be allocated 60% to partner A and 40% to partner B. If, however the articles of partnership are silent concerning the allocation of a partnership loss, then any loss is allocated

In the same manner as partnership profits.

Which of the following operating segment disclosures is not required under current U.S. accounting guidelines?

Liabilities

Grace Co. had a Chinese yuan payable resulting from imports from China and a Mexican peso receivable resulting from exports to Mexico. Grace recorded foreign exchange losses related to both its yuan payable and peso receivable. Did the foreign currencies increase or decrease in dollar value from the date of the transaction to the settlement date? YuanPeso a.Increase Increase b.Increase Decrease c.Decrease Increased. Decrease Decrease

Option B

In determining whether a particular operating segment is of significant size to warrant disclosure, which of the following is true?

Three tests are applied, and only one must be met.

Often a partner may sell his partnership interest to another individual. Why must all partners agree to allow this new partner the right to participate in the management of the partnership?

To protect the current partners from unwanted intrusion by the new partner. Current partners may be reluctant to yield management decision making that is essential to the well-being of the partnership.

True or false: Under the temporal method, inventory reported at cost on the foreign currency balance sheet could be reported at either cost or at net realizable value on the parent currency balance sheet.

True

In accounting for foreign currency transactions, which of the following approaches is used in the United States?

Two-transaction perspective; accrue foreign exchange gains and losses

Which of the following statements is true for a company that has managers responsible for product and service lines of business and managers responsible for geographic areas (matrix form of organization)?

Under IFRS, the company must refer to the core principle of IFRS 8 to determine operating segments.

Under the goodwill method to record a new partner's admission to a partnership, recognition of goodwill to the original partners is equitably allocated

according to the profit and loss percentages

When other partners are unable to recover any part of an insolvent partner's deficit capital balance, the insolvent partner's capital account should be closed by making

a credit to his/her capital account.

When the forward rate for a foreign currency is lower than its spot rate on a given date the foreign currency is selling at

a discount in the forward market.

A U.S. exporter sells goods to a foreign customer who pays in foreign currency in 90 days. The difference between the U.S. dollar value of the transaction at the date of sale and at the date cash is collected is recognized as

a foreign exchange gain or loss in net income.

When a new partner is formally admitted to a partnership

a legal dissolution of the previous partnership occurs. a new partnership is formed.

The current rate method of translation assumes that a foreign subsidiary is

a net asset that is exposed to foreign exchange risk.

At the time of partnership termination, Partner A is personally insolvent and has a negative capital balance. Partners B and C must absorb A's deficit through

a reduction in their capital accounts.

At the balance sheet date, a foreign currency payable arising from an import purchase should be reported on the balance sheet in home country currency at

a revalued amount to reflect the change in foreign currency exchange rate since the date of purchase.

In addition to tangible asset contributions, a new partner may bring other intangible value to a partnership including

a special talent or skill set. professional reputation. an ongoing set of business clients.