For a foreign subsidiary that uses the U.S. dollar as its functional currency, what method is required to ready the financial statements for consolidation?
A. Temporal Method.
B. Current Rate Method.
Current/Noncurrent Method.
D. Monetary/Nonmonetary Method.
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In accounting for foreign currency transaction, which of the following approaches is used in the United States?
A. One-transaction perspective; defer foreign exchange gains and losses.
B. Two-transaction perspective; defer foreign exchange gains and losses.
C. Two-transaction perspective; accrue foreign exchange gains and losses.
D. One-transaction perspective; accrue foreign exchange gains and losses.
Which statement is true regarding a foreign currency option?
A foreign currency option gives the holder the obligation to buy or sell foreign currency in the future.
B. A foreign currency option gives the holder the obligation to only sell foreign currency in the future.
C. A foreign currency option gives the holder the obligation to only buy foreign currency in the future.
D. A foreign currency option gives the holder the right but not the obligation to buy or sell foreign currency in the future.
Montgomery owned 75% of Noir Inc., and Noir owned 15% of Montgomery. This pattern of ownership would be called:
A. Mutual ownership.
B. Direct control.
C. Indirect control.
D. An affiliated group.
A parent company buys bonds on the open market that had been previously issued by its subsidiary. The price paid by the parent is less than the carrying amount of the bonds on the subsidiary’s records. How should the parent report the difference between the price paid and the carrying amount of the bonds on its consolidated financial statement?
As a loss on retirement of the bonds.
B. As a gain on retirement of the bonds.
C. As an increase to interest expense over the remaining life of the bonds.
D. Because the bonds now represent intra-entity debt, the difference is not reported.
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