1. Which of the following accounting method applies to consolidation of foreign subsidiaries that are freestanding units with self-contained foreign operations?

1. Remeasurement using the temporal method.

2. Translation using the current rate method.

3. Remeasurement using the fair value method.

4. Translation using the fair value method.

2. Which of the following is true when exchange rates change under the current rate method?

1. The foreign subsidiarys assets and liabilities are revalued in U.S. dollars, and the gain or loss is recognized in net income.

2. The foreign subsidiarys assets and liabilities are revalued in U.S. dollars, and the gain or loss is recognized in other comprehensive income.

3. Only the foreign subsidiarys monetary assets and liabilities are revalued in U.S. dollars, and the gain or loss is recognized in net income.

4. Only the foreign subsidiarys monetary assets and liabilities are revalued in U.S. dollars, and the gain or loss is recognized in other comprehensive income.

3. Under the temporal method, foreign currency nonmonetary assets and liabilities are reflected in the U.S. dollar balance sheet at the

1. historical exchange rate from when they were first recognized.

2. current rate of exchange on the balance sheet date.

3. present value rate of exchange from when they were first recognized.

4. temporal rate of exchange on the balance sheet date.

4. When accounting for a non-free-standing foreign subsidiary, translation exchange rates are accounted for using the temporal method which involves reporting cost of goods sold at the

1. current rate.

2. present value rate.

3. rate at time of transaction.

4. historical rate.