1- Which of the following statements describes how to translate Paint's ending retained earnings?

Multiple Choice

Use the rate provided for December 31, 2023.

Use the average rate for 2023.

Translate the beginning retained earnings using the January 1, 2023 rate, the net income using the average rate and the dividends using the rate on declaration date, dividends being paid before year end.

Translate the beginning retained earnings using the January 1, 2023 rate, the net income using the average rate and the dividends using the rate on which dividend is actually paid.

2- Assuming Art uses the equity method to account for its investment in Paint, which of the following is the correct equity method income on Art's separate-entity income statement for 2023?

Multiple Choice

CDN$680,000

US$500,000

CDN$687,500

CDN$675,000

3- Which of the following rates would be used to translate Paint's cash?

Multiple Choice

US$1 = CDN$1.35

US$1 = CDN$1.375

US$1 = CDN$1.36

US$1 = CDN$1.345

4- Which of the following rates would be used to translate Paint's accounts receivable?

Multiple Choice

US$1 = CDN$1.35

US$1 = CDN$1.375

US$1 = CDN$1.36

US$1 = CDN$1.345

5- Which of the following rates would be used to translate Paint's ending inventory?

Multiple Choice

US$1 = CDN$1.35

US$1 = CDN$1.375

US$1 = CDN$1.36

US$1 = CDN$1.345

6- If there were no additions or disposals of plant and equipment in 2023, which of the following rates would be used to translate Paint's plant and equipment?

Multiple Choice

US$1 = CDN$1.35

US$1 = CDN$1.375

US$1 = CDN$1.36

Rate not available.

7- Which of the following rates would be used to translate Paint's current liabilities?

Multiple Choice

US$1 = CDN$1.35

US$1 = CDN$1.375

US$1 = CDN$1.36

US$1 = CDN$1.345

8- Which of the following rates would be used to translate Paint's bonds payable?

Multiple Choice

US$1 = CDN$1.35

US$1 = CDN$1.375

US$1 = CDN$1.36

Rate not available.

9- Which of the following rates would be used to translate Paint's common shares?

Multiple Choice

US$1 = CDN$1.35

US$1 = CDN$1.375

US$1 = CDN$1.36

Rate not available.

10- Assuming Art uses the equity method to account for its investment in Paint, how would Art report the dividends it received from its foreign subsidiary on its separate entity financial statements for 2023?

Multiple Choice

Dividend income from a foreign entity is not taxable in Canada, therefore, not included in net income.

As a reduction to the Investment in Paint account.

As a dividend revenue reported in Canadian dollars on the income statement.

Included in other comprehensive income as part of the translation adjustment.

11- Assuming goodwill was acquired in the business combination, at what rate would the goodwill be translated on December 31, 2023?

Multiple Choice

US$1 = CDN$1.35

US$1 = CDN$1.375

US$1 = CDN$1.36

Translation of the goodwill is unnecessary as the goodwill is acquired in Canadian dollars.

Required information Art Inc. (Art), a Canadian company, has one wholly owned American subsidiary called Paint It Ltd. (Paint) based in Los Angeles, California, which was acquired January 1, 2023. Paint submitted its financial statements for 2023 to Art. Selected exchange rates in effect throughout 2023 are shown below: Paint's financial results for 2023 were as follows: Paint Financial Statements at December 31, 2023 (in U.S. dollars) Paint Financial Statements at December 31, 2023 (in U.S. dollars) Other information: - Sales, purchases, bond interest, and other expenses occurred evenly throughout the year. - Paint's functional currency is the U.S. dollar