1. What is a subsidiary's functional currency? a. The parent's reporting currency b. The currency used by the parent to acquire the subsidiary c. The currency in which the entity primarily generates and expends cash d. Always the currency of the country in which the company has its headquarters 2. In comparing the current rate and temporal methods of translation, which of the following is true? a. The reported balance of accounts receivable is normally the same ander both methods. b. The reported balance of inventory is normally the same under both methods. c. The reported balance of equipment is normally the same under both methods. d. The reported balance of depreciation expense is normally the same under both methods. 3. Which of the following statements is true for the translation process using the current rate method? a. A translation adjustment can affect consolidated net income. b. Equipment is translated at the historical exchange rate in effect at the date of its purchase. c. A translation adjustment is created by the change in the relative value of a subsidiary's monetary assets and monetary liabilities caused by exchange rate fluctuations. d. A translation adjustment is created by the change in the relative value of a subsidiary's net. assets caused by exchange rate fluctuations. 4. A foreign subsidiary of Thun Corporation has one asset (inventory) and no liabilities. The functional currency for this subsidiary is the yuan. The inventory was acquired for 100,000 yuan when the exchange rate was $0.16=1 yuan. Consolidated statements are to be produced, and the current exchange rate is $0.12=1 yuan. Which of the following statements is true for the consolidated financial statements? a. A remeasurement gain must be reported. b. A positive translation adjustment must be reported. c. A negative translation adjustment must be reported. d. A remeasurement loss must be reported