Chapter 14 AAC
The GAAP permits two methods for converting the foreign subsidiary's financial statements into U.S. dollars: temporal method and the fixed rate method. True False
False
The reporting currency is the currency in which the consolidated financial statements and the subsidiary financial statements are prepared. True False
False
Under the temporal method monetary assets and liabilities are remeasured at historical rates and other assets and equities are remeasured at current exchange rates. True False
False
A foreign subsidiary's foreign currency statements must conform with the U.S. GAAP before translated into U.S. dollars. True False
True
For foreign subsidiaries whose functional currency is not the parent's reporting currency the current rate method is used to translate assets and liabilities using the exchange rate on the balance sheet date. True False
True
Functional currency is the currency of the primary economic environment in which it operates. True False
True
Gains and losses from foreign currency transactions which are designated as economic hedges of a net investment in a foreign subsidiary are recorded as translation adjustments of stockholder's equity. True False
True
Intercompany transactions that produce receivable balances denominated in a currency other than the entity's functional currency are intercompany transactions. True False
True
The gain or loss on an after-tax basis from the hedging operations that can be considered a translation adjustment is limited in amount to the current translation adjustment from the equity investment. True False
True
When all elements of the financial statements are translated using a current exchange rate, it is referred to as the current rate method. True False
True
When the functional currency of a foreign entity is the U.S. dollar, the foreign entity's accounts are remeasured into its U.S. dollar functional currency. True False
True