Jay Co.s Year 1 consolidated financial statements include two wholly-owned subsidiaries, Jay Co. of Australia (Jay A) and Jay Co. of France (Jay F). The currency of the primary economic environment in which Jay A operates is the U.S. dollar, but its books are kept in Australian dollars. The currency of the primary economic environment in which Jay F operates is the euro, the currency in which it keeps its books. The currency of the primary economic environment in which Jay Co. operates is the U.S. dollar.

Select from the option list provided the correct response to each of the following statements about consolidated reporting by Jay Co. Each choice may be used once, more than once, or not at all.

Statement Answer

1. The Australian dollar is this type of currency in relation to Jay A.

2. A current exchange rate is used for this adjustment to the U.S. dollar from the euro.

3. If an enterprise consists of separate entities operating in different currency environments, their

financial statements must be presented in this manner.

4. Items stated in different currencies must be restated into this currency.

5. If Jay Fs books are not kept in euros, amounts must be remeasured using this method.

6. The process described in 5. can result in this effect.

7. Describes the environment in which the reporting entity operates.

Which statement below best matches 1 through 7

Reporting currency

Functional currency

Local currency

Translation

Consolidated

Economic Indicators

Historical rate

Temporal

Current

Transaction gain or loss