Please help this homework, it's International Accounting 3350.

Directions: Apply IFRS to all questions unless otherwise instructed. Show all computations, as needed. Chapter 7 Foreign Currency & Hedging Foreign Exchange Risk True or False ______ 1. From a U.S. firm's perspective of buying and selling, appreciation of the foreign currency will generate foreign exchange gains on receivables created from its export sale of goods to foreign buyers and foreign exchange losses on payables created from its import purchase of goods from foreign sellers. Multiple Choice ______ 2. U.S. based General Motors has a Japanese yen receivable resulting from its export sale of goods to Japan and a Brazilian real payable resulting from its import purchase from Brazil. General Motors recorded foreign exchange gains related to both its yen receivable and real payable. Did the foreign currencies increase or decrease in dollar value from the date of the transaction to the settlement date? YEN REAL a. Increase Increase b. Decrease Decrease c. Decrease Increase d . Increase Decrease On November 1, 2015, Fortune Company (a U.S.-based company) entered into a five-month forward contract to buy 800,000 Mexican pesos on March 31, 2016. The following U.S. dollar per peso exchange rates apply: Forward Rate Date November 1, 2015 ..................... Spot Rate $0.052 (to 03-01-2016) $0.047 December 31, 2015 ................... 0.045 0.057 March 31, 2016 ........................... 0.048 p1 The present value factor corresponding to the company's incremental borrowing rate for time period involved is 0.9706 Question #3: Forward contract to buy foreign currency at a future date Required: In what manner and amount should Fortune Company classify and report the forward contract on its December 31, 2015 balance sheet? Please show your work: The following information applies to questions #4 and #5 below: Amazing Corporation (a U.S.-based company) sold parts to a customer in Wales on October 1, 2015, for 100,000 with payment due on April 1, 2016. Relevant exchange rates are: p2 Forward Rate Date October 1, 2015 .......................... Spot Rate $1.88 (to 04-01-2016) $1.85 December 31, 2015 ................... 1.85 1.84 April 1, 2016 .............................. 1.90 The present value factor corresponding to the company's incremental borrowing rate for time period involved is 0.9500. Question #4: Export sale of goods to foreign buyer with future payment due in foreign currencywith no forward contract Required: Assuming no forward contract was entered into, how much foreign exchange gain or loss should Amazing Corporation report on its December 31, 2015 income statement with regard to this transaction? Please show your work: Question #5: Sale to foreign customer with purchase of forward contract Required: Assume on October 1, 2015, Amazing Corporation signed a forward contract to sell 100,000 on April 1, 2016. In what manner and in what amount should Amazing Corporation classify and report the forward contract on its December 31, 2015 financial statements? Please show your work: p3 Question #6: Garden Grove Corporation made an export sale of goods to a French customer on September 15, 2015, for 100,000 Euros. Payment was subsequently received on October 15, 2015. The following exchange rates apply: Date U.S. Dollar per Euro September 15, 2015 ............................................ $0.40 September 30, 2015 ............................................ 0.42 October 15, 2015 ................................................. 0.37 Required: Prepare all journal entries for Garden Grove Corporation in connection with this sale, assuming that the company closes its books on September 30th to prepare interim financial statements: September 15, 2015: Sale and recording of receivable Debit Credit ___________________________________________________________________________________________________________ September 30, 2015: Revaluation of receivable based on rate on 09-30-15 Debit Credit ___________________________________________________________________________________________________________ October 15, 2015: Revaluation of receivable based on change of rate between Sept. 30 & Oct. 15. Record receipt of cash from French customer and settlement of receivable. Debit Credit Debit Credit p4 Question #7: On October 1, 2015, Dell Corporation purchases inventory from a Mexican supplier for 220,000 Mexican Pesos. Dell will make payment in 240 days after it has sold the merchandise. Sales are made rather quickly and Dell pays this entire obligation on March 16, 2016. The following exchange rates for 1 peso apply: Date U.S. Dollar per Mexican Peso October 1, 2015 .................................................... $0.054 December 31, 2015 ............................................. 0.047 March 16, 2016 .................................................... 0.057 Required: Prepare all journal entries for Dell in connection with the purchase and payment: October 1, 2015: Purchase of inventory & recording of payable Debit Credit ___________________________________________________________________________________________________________ December 31, 2015: Revaluation of payable based on current rate Debit Credit ___________________________________________________________________________________________________________ March 16, 2016: Revaluation of payable based on change between Dec. 31 rate - Mar. 16 rate. Record payment of cash to supplier and settlement of payable. Debit Credit p5 Debit Chapter 8 Translation of Foreign Currency Financial Statements Credit Multiple Choice Questions ______ 8. Which of the following items is normally translated the same way under both the current rate method and temporal methods of foreign currency financial statement translation? a. Inventory b. Sales revenue c. Depreciation expense d. All of the above ______ 9. In translating the financial statements of a foreign subsidiary into the parent's reporting currency under the current rate method, which of the following statements is true? a. Expenses are translated using a combination of current and historical exchange rates. b. Intangible assets are translated at the historical exchange rates in effect on the date the assets are purchased. c. The translation adjustment is a function of the foreign subsidiary's net assets. d. The translation adjustment is a function of the relative amount of monetary assets and monetary liabilities held by the foreign subsidiary. ______ 10. What-How is based in Hong Kong. A foreign subsidiary of What-How located in Sweden has one asset (inventory) and no liabilities. The Swiss subsidiary operates with a significant degree of autonomy from What-How and primarily uses its host country's currency (Swiss Franc) in carrying out its transactions. Since the date the inventory was acquired, the Swiss Franc has decreased in value in relation to What-How's reporting currency. In translating the foreign subsidiary's Swiss Franc financial statements into the parent's reporting currency, which of the following is true? a. A translation gain must be reported in net income. p6 b. A positive translation adjustment must be reported in stockholders' equity. c. A negative translation adjustment must be reported in stockholders' equity. d. A translation loss must be reported in net income. ______ 11. Which method of translation maintains, in the translated financial statements, the underlying valuation methods used in the foreign currency financial statements? a. Current rate method; income statement translated at average exchange rate for the year. b. Current rate method; income statement translated at exchange rate at the balance sheet date. c. Temporal method. d. Monetaryonmonetary method. ______ 12. Which of the following best explains how a translation loss arises when the temporal method of translation is used to translate the foreign currency financial statements of a foreign subsidiary? a. The foreign subsidiary has more monetary assets than monetary liabilities, and the foreign currency appreciates in value. b. The foreign subsidiary has more monetary liabilities than monetary assets, and the foreign currency depreciates in value. c. The foreign subsidiary has more monetary assets than monetary liabilities, and the foreign currency depreciates in value. d. The foreign subsidiary has more total assets than total liabilities, and the foreign currency appreciates in value. ______ 13. In accordance with U.S. GAAP, which translation combination would be appropriate for a foreign operation whose functional currency is the U.S. dollar? a. b. c. d. Method Temporal Temporal Current rate Current rate Treatment of Translation Adjustment Separate component of stockholders' equity Gain or loss in income statement Separate component of stockholders' equity Gain or loss in income statement ______ 14. The functional currency of Garland Inc.'s Japanese subsidiary is the Japanese yen. Garland borrowed Japanese yen as a partial hedge of its investment in the subsidiary. How should the p7 transaction gain on the foreign currency borrowing be reported in Garland's consolidated financial statements? a. The transaction gain is reported as an adjustment to interest expense in the income statement. b. The transaction gain is reported as an extraordinary item in the income statement. c. The transaction gain is offset against the negative translation adjustment related to the Japanese subsidiary in the stockholders' equity section of the balance sheet. d. The transaction gain is offset against the negative translation adjustment related to the Japanese subsidiary on the income statement. Question #15 & 16: Selected balance sheet accounts of a Taiwanese-based () foreign subsidiary of the Pacter Company have been translated into parent currency, Chinese Yuan Renminbi, () as follows: Accounts receivable Marketable securities, at cost Prepaid insurance Goodwill Translated at Current Rates Historical Rates 200,000 320,000 400,000 540,000 240,000 430,000 500,000 600,000 1,340,000 1,890,000 15) Required: Assume the foreign subsidiary is determined to have foreign currency, Taiwan New Dollar (), as its functional currency (per IAS 21). Based on the appropriate foreign currency translation method, calculate the total amount of assets that should be included in Pacter's partial consolidated balance sheet (below) per IFRS. Partial Consolidated Balance Sheet Your response: Accounts receivable ................................. Marketable securities, at cost .................. Prepaid insurance .................................... Goodwill .................................................... Total ...................................... __________________________________________________________________________________________________________________________ 16) Required: Assume the foreign subsidiary is determined to have Pacter's reporting currency, Chinese Yuan Renminbi (), as its functional currency. Based on the appropriate foreign currency translation p8 method, calculate the total amount of assets that should be included in Pacter's partial consolidated balance sheet (below) per IFRS. Partial Consolidated Balance Sheet Your response: Accounts receivable ................................. Marketable securities, at cost .................. Prepaid insurance .................................... Goodwill .................................................... Total ...................................... _____________________________________________________________________________________________________________ Question #17 & 18: The Year 2015 financial statements of the Russian subsidiary of Globe Corporation (a German company) revealed the following: Russian Ruble Beginning Inventory ............................... $330,000 Purchases ................................................ + 480,000 Ending Inventory .................................... - 210,000 Cost of Goods Sold .................................. 600,000 January 1, 2015 ...................................... Average, 2015......................................... December 31, 2015 ................................ Euro dollar ():1 Ruble $ 0.38 0.29 0.32 The beginning inventory was acquired in 4th quarter of the previous year when exchange rate was $0.45 = 1 Ruble; ending inventory was acquired in 4th quarter of 2015 when exchange rate was $0.37 = 1 Ruble. 17) Required: Assuming the current rate method is the appropriate method of currency translation, determine the amounts at which the Russian subsidiary's ending inventory and cost of goods sold should be included in Globe's Year 2015 consolidated financial statements. Your response: Ruble x Exchange Rate = Euro Cost of goods sold ............ Ending inventory ............. __________________________________________________________________________________________________________________________ 18) Required: Assuming the temporal method is the appropriate method of currency translation, determine the amounts at which the Russian subsidiary's ending inventory and cost of goods sold should be included in Globe's Year 2015 consolidated financial statements. p9 Ruble Your response: x Exchange Rate = Euro Beginning inventory ............ Purchases ............................. Ending inventory ................ Cost of goods sold ............ Ending inventory ............. Chapter 9 Additional Financial Reporting Issues Question #19: Describe all the circumstances under which a subsidiary could, and perhaps should, be excluded from consolidation. Please elaborate. Type Your Response: Question #20: In accordance with IFRS 8, how does a company determine which operating segments to report separately? Please elaborate. Type Your Response: Question #21: p 10 What are the major differences in the segment information required to be reported in accordance with IFRS and in accordance with U.S. GAAP? Please elaborate. Type Your Response: Question #22: What types of entity-wide disclosures are required by IFRS 8? Please elaborate. Type Your Response: p 11