Explain how a German subsidiary’s year-end balance in retained earnings is expressed in dollars assuming that the euro is the functional currency.
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Explain how a German subsidiary’s year-end balance in retained earnings is expressed in dollars assuming that the euro is the functional currency.
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- Assuming that the functional currency of a foreign subsidiary is the local currency, which of the following accounts would be translated at the current rate on the Balance Sheet date (B/S Rate)? a.Additional Paid-In Capital b.Cost of Goods Sold c.Retained Earnings d.Allowance for Doubtful AccountsHow to translate a foreign subsidiary’s financial statements into its parent’s reporting currency using the current rate method and calculate the related translation adjustment?Which translation method results in a set of financial statements as if the foreign subsidiary’s transactions were carried out in US dollars? Current rate method Temporal method
- If the euro is chosen as the Ukraine subsidiary’s functional currency, Eurexim will translateits accounts receivable using the:A . rate in eff ect at the transaction date.B . average rate for the reporting period.C . rate in eff ect at the end of the reporting periodIf the hryvnia is chosen as the Ukraine subsidiary’s functional currency, Eurexim willtranslate its inventory using the:A . average rate for the reporting period.B . rate in eff ect at the end of the reporting period.C . rate in eff ect at the time the inventory was purchased.In translating a foreign subsidiary's financial statements, which exchange rates does the current rate method require for the subsidiary's assets and liabilities? The average exchange rate for the period. O The exchange rate when assets was acquired or liabilities was incurred. The spot exchange rate as of the date of the balance sheet. The estimated exchange rate when accounts were settled in the future.
- Assume that a U.S. company has a French subsidiary whose functional currency is the euro. Explain why the translation adjustment is not included as a component of net income on the consolidated income statement.If the euro is chosen as the Ukraine subsidiary’s functional currency, Eurexim will translateits fi xed assets using the:A . average rate for the reporting period.B . rate in eff ect when the assets were purchased.C . rate in eff ect at the end of the reporting period.Looking for help with these two questions. 1. Prepare financial statements (income statement, statement of retained earnings, and balance sheet) for the Canadian subsidiary in its functional currency, Canadian dollars.2. Translate the Canadian dollar functional currency financial statements into U.S. dollars so that Sendelbach can prepare consolidated financial statements.
- This subsidiary's functional currency is a foreign currency. What total should Orchid's balance sheet include for the preceding items?Question What causes balance sheet (or translation) exposure to foreign exchange risk? How does balance sheet exposure compare with transaction exposure? In translating a foreign subsidiary's financial statements, what exchange rate should be used for the subsidiary's revenues and expenses? How can a parent corporation determine the functional currency for a foreign subsidiary that conducts business in more than one country? What concept underlies the temporal method of translation? What concept underlies the current rate method of translation? How does balance sheet exposure differ under these two methods? What are the major procedural differences in applying the current rate and temporal methods of translation?Which is the most simple way that is able to protect a U.S firm's earnings of its consolidated income statement in the depreciation of euro relative to U.S. dollar? A. Selling euros forward in the foreign exchange market. B. Partner with the local firm of the oversea market. C. Purchasing euros forward in the foreign exchange market. D. Establish a subsidiary in the oversea economy.