Question
1) The financial statements of foreign subsidiaries being consolidated with a parent company need to choose which currency translation method, and which exchange rate model
1) The financial statements of foreign subsidiaries being consolidated with a parent company need to choose which currency translation method, and which exchange rate model to use in converting financial statements from a foreign currency to the parent company's currency.
2) The current rate method assumes that a company's net investment in a foreign operation is exposed to foreign exchange risk, justifying reporting all assets and liabilities of a foreign operation using current exchange rates.
3) Using the temporal translation method, long-term non-financial assets are translated at effective exchange rates when they were acquired, in order to present financial statements as if the foreign subsidiary had actually used the parent company's currency in accounting for operations.
4) The temporal method accounts for cost of goods sold using a weighted average exchange rate for the period.
5) Foreign currency translation of financial statements for subsidiaries accounted for using currencies in highly inflationary economies are required to use the current rate method.
6) The current rate method requires dividends to be translated at the exchange rate on the date paid.
7) Translation adjustments under the current rate method are accumulated in a separate
account that is reported in the balance sheet in the equity section.
8) The temporal method accounts for gains and losses from foreign currency price level changes as remeasurement gains or losses, and reports them as comprehensive income.
9) A company that uses hedging to avoid reporting remeasurement losses in net income may end up incurring unwanted foreign exchange gains or losses.
10) In consolidating foreign subsidiaries, the excess of fair value over book value denominated in the foreign currency must also be translated into the parent's reporting currency at the current exchange rate.
PLEASE DETERMINE IF STATEMENT IS TRUE OR FALSE
WILL RATE HIGH IF CORRECT ANSWERS ARE PROVIDED
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