If the foreign subsidiary\'s functional currency is US dollar, what method shoul
ID: 2403115 • Letter: I
Question
If the foreign subsidiary's functional currency is US dollar, what method should be used to translate the foreign subsidiary's financial statements?
Question 16 options:
Book value method
Temporal method.
Fair value method
Current rate method
Question 17 (3 points)
If the foreign subsidiary's functional currency is foreign currency, what method should be used to translate the foreign subsidiary's financial statements?
Question 17 options:
Current rate method
Temporal method.
Fair value method
Book value method
Book value method
Temporal method.
Fair value method
Current rate method
ABC Inc. starts a subsidiary in a foreign country on January 1, 2004. The foreign subsidiary reports the 12/31/04 trial balance below, expressed in the foreign currency (JK) 12/31/04 Trial Balance (J Cash Accounts receivable Building (purchased 2/1/04) Accumulated depreciation Building Interest payable Note payable (issued 1/1/04) Dividends paid (paid 10/1/04) Common stock (issued 1/1/04) Rent revenue Interest expense Depreciation expense Repair expense Total Debit 49 12 170 Credit 17 12 120 6 50 72 12 17 271 271 Exchange rate (per JK) 1/1/04 2/1/04 10/1/04 12/31/04 Average for 2004 $2.28 $2.13 $2.28 $2.22 $2.16Explanation / Answer
Q16. Option B Temporal method because the local currency of subsidiary is JK while it is temporarily using $ for the purpose of financial reporting
Q17. Current Rate method as functional currency and reporting curreny are same. Option A