International Accounting: Exercises 4 and 5 (Quality Work Only)

profilegwcthe
exercises_4_and_5.docx
Home>Business & Finance homework help>Accounting homework help>International Accounting: Exercises 4 and 5 (Quality Work Only)

Exercise 4

Question 1 (1 point)

What is the requirement for reporting derivatives under international accounting standards and U.S. GAAP?

 a

They may be shown on the balance sheet or they may be treated as off-balance sheet investments.

 b

They must be shown on the balance sheet at fair value.

 c

They must be shown on the balance sheet at historical cost.

 d

They may be shown on the balance sheet at historical cost or at net realizable value.

Question 2 (1 point)

Of the 16 members of the International Accounting Standards Board (IASb), how many work for the board on a full-time basis?

 a

8

 b

13

 c

10

 d

0

Question 3 (1 point)

Under U.S. GAAP, foreign exchange losses should be recorded by _______.

 a

Debiting foreign exchange loss

 b

Crediting foreign exchange loss

 c

Debiting retained earnings.

 d

Debiting sales revenue

Question 4 (1 point)

According to the World Trade Organization, what was the size of international trade in 2008?

 a

$7,000,000,000 (7 billion dollars)

 b

$70,000,000,000 (70 billion dollars)

 c

$37,000,000,000 (37 billion dollars)

 d

$16,000,000,000,000 (16 trillion dollars)

Question 5 (1 point)

Under IAS 32, which of the following is a financial liability?

 a

A payable

 b

A bank loan

 c

An intercompany loan payable

 d

All of the above

Question 6 (1 point)

What information is needed to determine the fair value of a foreign currency forward contract?

 a

The forward rate at the date the contract was entered

 b

The current forward rate for a contract that matures on the same dates as the forward contract that was entered into

 c

A discount rate to determine the present value of the contract

 d

All of the above information is needed

Question 7 (1 point)

IAS 32 defines a financial instrument as _______.

 a

The currency of a foreign country in which the enterprise does business

 b

A certified check

 c

Any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity

 d

A recognized stock exchange

Question 8 (1 point)

Under IAS 39, Financial Instruments: Recognition and Measurement, which of the following is NOT a category into which a financial asset must be classified?

 a

Property, plant, and equipment

 b

Held-to-maturity investments

 c

Loans and receivables

 d

Available-for-sale financial assets

Question 9 (1 point)

IAS 18, Revenue, covers which types of revenues?

 a

Sale of goods

 b

Rendering of services

 c

Interest, royalties, and dividends

 d

All of the above

Question 10 (1 point)

What is a foreign exchange rate?

 a

The price to buy a foreign currency

 b

The price to buy foreign goods

 c

The difference between the price of goods in a foreign currency and the price in a domestic currency

 d

The cost to hold all monetary assets in a single currency

Question 11 (1 point)

When a currency is allowed to increase or decrease in value relative to other currencies, the currency is said to _______.

 a

Be pegged to another currency

 b

Be less valuable

 c

Float

 d

Devalue

Question 12 (1 point)

In the years between 1990 and 2001 when global gross domestic product rose 27%, what was the growth in global exports?

 a

25%

 b

75%

 c

35%

 d

50%

Question 13 (1 point)

In which of the following countries is the use of IFRS not allowed for domestic companies listed on its stock exchanges?

 a

United Kingdom

 b

Yugoslavia

 c

Australia

 d

United States

Question 14 (1 point)

A non-cancelable order of a product that specifies the foreign currency price and date of delivery is called a _______.

 a

Hedge

 b

Derivative

 c

Foreign currency firm commitment

 d

International transaction

Question 15 (1 point)

The number of Japanese yen (¥) required today to buy one U.S. dollar ($) today is called _______.

 a

The spot rate

 b

The exact rate

 c

The forward rate

 d

The retail rate

Question 16 (1 point)

What is the official language of the IASB?

 a

English

 b

French

 c

Spanish

 d

German

Question 17 (1 point)

What is a strike price?

 a

The exchange rate that is used to buy a foreign currency today

 b

The price that will be paid for goods in a forward contract

 c

The exchange rate that will be used if a foreign currency option is executed

 d

The difference between the wholesale rate and the retail rate for foreign currency exchange

Question 18 (1 point)

Which of the following terms describe the qualitative characteristic of information usefulness?

 a

Relevance

 b

Understandability

 c

Representational faithfulness

 d

All of the above are characteristics of information usefulness.

Question 19 (1 point)

The IFRS Foundation will normally have as its trustees how many senior partners of international accounting firms?

 a

0

 b

2

 c

5

 d

10

Question 20 (1 point)

Under IAS 39, under what circumstances will derecognition of a financial liability occur?

 a

When the obligation has been paid

 b

When the obligation has been canceled

 c

When the obligation has expired

 d

All of the above

Exercise 5

Question 1 (1 point)

What exchange rate should be used to translate the common stock of Essco Ltd, a foreign subsidiary of Peako Corp., when consolidating financial statements?

 a

Current rate

 b

Historical rate

 c

Average rate

 d

Cannot be determined with the information given

Question 2 (1 point)

What is another term for balance sheet exposure?

 a

Transaction exposure

 b

Exchange exposure

 c

Translation exposure

 d

Negative exposure

Question 3 (1 point)

Which method of dealing with inflation in financial reporting reflects current replacement cost of specific assets?

 a

Current replacement cost method

 b

General purchasing power method

 c

Temporal method

 d

Current rate method

Question 4 (1 point)

Which items in the balance sheet are subject to accounting exposure?

 a

Only assets

 b

Only liabilities and owners' equity

 c

All accounts translated at historical exchange rates

 d

All accounts translated at current exchange rates

Question 5 (1 point)

Which methods of translating foreign currency financial statements must be used according to FASB ASC 830, Foreign Currency Matters?

 a

Temporal method for all subsidiaries

 b

Current rate method for all subsidiaries

 c

U.S. parent companies may choose between the temporal method and the current rate method.

 d

Temporal method for subsidiaries that are closely controlled by the parent and current rate method for subsidiaries that are not

Question 6 (1 point)

When the current rate method is used, the sign (+ or -) of the translation adjustment is the result of _______.

 a

Appreciation or depreciation of the foreign currency

 b

The nature of the balance sheet exposure

 c

Both (a) and (b)

 d

None of the above

Question 7 (1 point)

Companies must choose between which exchange rates for consolidating foreign subsidiaries?

 a

Spot rate and forward rate

 b

Spot rate and current rate

 c

Current rate and historical rate

 d

Domestic rate and international rate

Question 8 (1 point)

Under FASB ASC 830, Foreign Currency Matters, what group is responsible for determining the functional currency of a foreign subsidiary?

 a

Financial Accounting Standards Board

 b

International Accounting Standards Board

 c

Securities and Exchange Commission

 d

Company management

Question 9 (1 point)

What is meant by the translation of foreign currency financial statements?

 a

Converting financial statements prepared under foreign GAAP into domestic GAAP

 b

Converting financial statements of a foreign currency into a domestic currency

 c

Converting the language used in financial statements from foreign to domestic

 d

Converting historic cost financial statements into current cost financial statements

Question 10 (1 point)

What does it mean to say that the inflation rate last year was 5%?

 a

All prices are 5% more at the end of the year than they were at the beginning of the year.

 b

The price of specific products increased 5% between the beginning and the end of the year.

 c

On average, a typical basket of goods costs 5% more at the end of the year than it did at the beginning of the year.

 d

The general purchasing power of the dollar has increased 5% between the beginning of the year and the end of the year.