19. Shareholders who sell their shares back to the company under a share repurchase program are: Multiple Choice

• not taxed.

• taxed at ordinary rates.

• taxed at capital gains rates.

• subject to tax penalties.

21. The upward or downward adjustment to reflect fair value of equity investment securities is a direct debit or credit to a fair value adjustment account.

True or False

24. The financial statements of freestanding foreign companies that are majority-owned by a U.S. company must be ______ to U.S. dollars using the ______ method.

Multiple Choice

• translated; temporal

• translated; current rate

• remeasured; temporal

• remeasured; current rate

26. Under the temporal method, income statement items that relate to newly recognized assets and liabilities generally are remeasured using the:

Multiple Choice

• average exchange rate.

• current exchange rate.

• historical exchange rate.

• lowest exchange rate for the period.

28. Minka writes a futures contract for 1,000 bushels of June wheat. If Minka does not personally want to take possession of the wheat, she can consider the following beneficial action:

Multiple Choice

• sell the futures contract.

• pay a release of contract fee.

• default on the future contract.

• she cannot avoid accepting delivery of the wheat.