Question

31. The appropriate exchange rate for translating a plant asset in the balance sheet of a foreign subsidiary in which the functional currency is the U.S. dollar is the A) forward rate. B) current exchange rate. C) average exchange rate for the current year. D) historical exchange rate in effect when the plant asset was acquired or the date of acquisition, whichever is later. 32. A foreign subsidiary's functional currency is its local currency which has not experienced significant inflation. The weighted average exchange rate for the current year would be the appropriate exchange rate for translating Wages expense Yes Yes No No Sales to customers Yes a. b. С. d. 0 Yes 33. Assuming no significant inflation, gains resulting from the process of translating a foreign entity's financial statements from the functional currency to U.S. dollars should be included as a(n): A) other comprehensive income item. B) extraordinary item (net of tax). C) deferred credit. D) part of continuing operations. 34. In preparing consolidated financial statements of a U.S. parent company and a foreign subsidiary, the foreign subsidiary's functional currency is the currency A) in which the subsidiary maintains its accounting records. B) of the country the parent is located. C) of the country the subsidiary is located. D) in which the subsidiary primarily generates and spends cash. 35. Gains from remeasuring a foreign subsidiary's financial statements from the local currency, which is not the functional currency, into the parent company's currency should be reported as a(n): A) other comprehensive income item. B) deferred credit. C) part of continuing operations. D) extraordinary item (net of tax).

Answer 1

31) Solution: The correct option is” B”i.e current exchange rate

32) Solution: The correct option is “A” Wages expense –YES and Sales to customer-YES