Question
When comparing companies that hold equity investments in other corporations, which of the following statements is most accurate? All else being equal, leverage measures for
When comparing companies that hold equity investments in other corporations, which of the following statements is most accurate? All else being equal, leverage measures for a firm using consolidation will appear:
less favorable than those for a comparable firm using the equity method. | ||
more favorable than those for a comparable firm using the equity method. | ||
more or less favorable depending on the leverage of the investee company. |
Which of the following statements regarding the effects of translation on financial statement items/ratios is most accurate?
Leverage is higher under the current rate method as compared to under the local currency. | ||
Depreciation in the reporting currency under the current rate method is higher than under the temporal method if the local currency has appreciated. | ||
Fixed assets are relatively overstated under the temporal method compared to the local currency if the local currency has appreciated. |
Which of the following situations does NOT require the use of the temporal method? The:
foreign subsidiary is operating in a highly inflationary economy. | ||
local currency is the functional currency. | ||
functional currency is some currency other that the local currency or the U.S. dollar. |
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