第三章練習國際會計題

一、SingleChoice1.Whichofthefollowingtranslationmethodissingleratemethod?(B)ATemporalmethod

B.CurrentratemethodC.Monetary/non-monetarymethodD.Current/non-currentmethod

2.()viewsmonetaryassetsandliabilitiesexposedtothesameexchangeexposure.(B)A.CurrentratemethodB.Monetary/non-monetarymethodC.Current/non-currentmethodD.Temporalmethod

3.UnderSFASNO.52,theprimarycurrencyinwhichacompanyconductsitsbusinessiscalled(B).A.Corecurrency B.FunctionalcurrencyC.Hardcurrency D.Convertiblecurrency

4.Aforwardcontractisanagreementto(C).A.BuyaforeigncurrencyinthefutureatavariablerateB.SellaforeigncurrencyinthefutureatasetrateC.BuyorsellaforeigncurrencyinthefutureatasetrateD.Noneoftheabove

5.Whichofthefollowingsisanon-monetaryitem?(D)A.Cash B.AccountspayableC.Notesreceivable D.Equipment

6.UnderSFASNO.52,thetemporalmethodoftranslationisusedwhen(C).A.ThelocalcurrencyisthefunctionalcurrencyB.ThelocalcurrencyisthereportingcurrencyC.Theparent’scurrencyisthefunctionalcurrencyD.Theparent’scurrencyisthereportingcurrency二、MultipleChoice

1.WhichtranslationmethodsputforeigntranslationgainsorlossesinIncomeStatement?(BCD)A.CurrentratemethodB.Monetary/non-monetarymethodC.Current/non-currentmethodD.TemporalmethodE.Historicratemethod2.Whichitemsinfollowsaremonetaryitems?

(BCE)A.InventoryB.AccountsReceivableC.Long-termdebtsD.NetFixedAssetE.Cash

3.Inforeigncurrencytranslationmethods,whichmethodstranslateBalancesheetatfirst?(BCD)A.CurrentratemethodB.Monetary/non-monetarymethodC.Current/non-currentmethodD.TemporalmethodE.Historicratemethod4.Foreigncurrencytransactionincludes(ABCD)A.spottransactionB.forwardcontractC.currencyoptionD.currencyswapE.currencytranslation.5.Therearethreetypesofforeignexchangeexposure,Theyare(ACD)A.Translationexposure B.ExchangerateexposureC.TransactionexposureD.EconomicexposureE.Foreigncurrencyexposure6.Whichoffollowingforeignexchangeexposuresarenotincludedintransactionexposure?(CE)A.BillingexposureB.QuotationexposureC.TranslationexposureD.BacklogexposureE.Economicexposure7.Whichofthefollowingsituationscanarisetransactionexposure?(ABCDE)A.Borrowingfundsinaforeigncurrency. B.Engagingincontractstobuyorsellforeigncurrencyatafuturedate.C.Buyingoncreditgoodsorserviceswhosepricesarecontractuallydenominatedinforeigncurrencies.D.Sellingoncreditgoodsorserviceswhosepricesarecontractuallydenominatedinforeigncurrencies.E.Lendingfundsinaforeigncurrency.

三、TrueorFalse1.Ifthespotrateislowerthantheforwardrateforaparticularcurrency,thenthatcurrencywouldbesellingatapremium.(T)

2.Currencyoptionisacontractthatprovidestherightandtheobligationtotradeaforeigncurrencyatasetexchangerateonorbeforeagivendateinthefuture.(F)

3.Bidrateisthepriceatwhichafinancialinstitutioniswillingtosellacurrency.

(F)4.Indirectquoteisthepriceofoneunitoftheforeigncurrencypricedinthedomesticcurrency.(F)5.Directquoteisthepriceofoneunitoftheforeigncurrencypricedinthedomesticcurrency.(T)

6.InCurrentRateMethod,allitemsinBalanceSheetaretranslatedatthecurrentrate.

(F)7.TemporalMethodonlychangesthemonetaryunitofmeasurementnottheattributeofmeasurement.(T)8.SFASNO.8essentiallymandatedthatU.S.companiesrequiredtotranslateforeigncurrencyamountsinpreparingconsolidatedfinancialstatementsusethecurrentmethod.

(F)9.Currencyoptionisacontractthatprovidestherightbutnottheobligationtotradeaforeigncurrencyatasetexchangerateafteragivendate.(F)

四、BriefAnswer1.What’sthedefinitionforaFunctionalCurrencyinFASBStatementNo.52?WhatarethethreecircumstancesthataFunctionalCurrencybeenChosen(regardingwhichcountrythefunctionalcurrencybelongsto)?Andwhattranslationmethodshouldbeusedineachcircumstance?FunctionalCurrencyisthecurrencyoftheprimaryeconomicenvironmentinwhichtheforeignsubsidiaryoperatesandgeneratescashflows.1) theLocalCurrencyisthefunctionalcurrencyCurrentRateMethod.2) theParent’sCurrencyisthefunctionalcurrencyTemporalMethod3) Currencyofathirdcountryisthefunctionalcurrency,atwo-steptranslationprocess:Localcurrencytothefunctionalcurrencyusingthetemporalmethod;thefunctionalcurrencytotheparentcurrencyusingthecurrentratemethod.2.Pleasewritedowntheconceptofforeignexchangeexposureandits’threekinds.

Ameasureofthepotentialforafirm’sprofitability,cashflow,andmarketvaluetochangebecauseofachangeinexchangeratesTranslationexposureTransactionexposureEconomicexposure3.PleasewritedowntheDifferentassumesoffourforeigncurrencytranslationmethods.Differentassumes:WhichassetsandliabilitiesaresubjecttoforeigncurrencyexposureCurrentratemethod:allassetsandliabilitiesfacecurrencyrisk.(2’)Monetary/non-monetarymethod:onlythemonetaryitemsfacecurrencyrisk.(2’)Current/non-currentmethod:onlythecurrentitemsfacecurrencyrisk.(2’)Temporalmethod:adjustbalancesheetitemsaccordingtothevaluationbasisusedinfinancialstatements.(2’)4.Pleaseinterpret:Bidrate;Askrate;theSpreadbetweenbidrateandaskrate.Bidrate(buyrate):thepriceatwhichafinancialinstitutioniswillingtobuyacurrency.(4’)Askrate(sellrate,offerrate):thepriceatwhichfinancialinstitutioniswillingtosellacurrency.(4’)Thespread:differencebetweenthebidandaskrates(2’)

5.Pleasewritedownfourkindsofforeigncurrencytransactionandgivethedefinition.SpotTransaction–Exchangeonecurrencyforanotheratanexchangeratequotedforimmediatedeliveryorwithin2businessdays.(3’)ForwardContract–Participantscontracttodayforfuturedeliveryofforeigncurrency.(3’)Currencyoptionisacontractthatprovidestherightbutnottheobligationtotradeaforeigncurrencyatasetexchangerateonorbeforeagivendateinthefuture.(2’)Currencyswapisatransactionthatinvolvesasimultaneouspurchaseandsaleoftwodifferentcurrencies,withthepurchasebeingeffectiveatonceandthesalebacktothesamepartyatapriceagreedupontodaybuttobecompletedataspecifiedfuturedate.(2’)6.Defineandcompare:ForeignTransaction,ForeignCurrencyTransaction,ForeignCurrencyTranslationandForeignOperation.Foreigntransaction:financialtransactionsbetweenothercountries(2’)Foreigncurrencytransaction:onethatrequiressettlementinacurrencyotherthantheentity’sfunctionalcurrency.(2’)Foreigncurrencytranslation：Processofexpressingfinancialstatementsdenominatedinonecurrencyintermsofasecondcurrencyforspecialpurposes.(2’)Foreignoperation:Asubsidiary,associate,jointventure,orbranchwhoseactivitiesarebasedinacountryotherthanthatofthereportingenterprise.(2’)Differences:(2’)Noteveryforeigntransactionisdenominatedinaforeigncurrency,butforeigncurrencytransactionis.TransactionGain/Lossisrealizedandaffectsthecashflowsofthecompany,whereasTranslationGain/Lossisnot.

7.Whatarethefourmethodsinforeigncurrencytranslation(I,II,III,IV)?PleasewritedownthetypeofexchangeratesusedineachmethodforEquipment,

Long-termReceivables,Inventories(CostandMarket),RetainedearningsandDepreciationexpense

.A=AverageexchangerateforthecurrentperiodC=CurrentexchangerateatbalancesheetdateH=HistoricalexchangerateB=Balancing(residualorplug)figure

I.II.III.IV.Equipment

Long-termReceivables

InventoriesCost

Market

Retainedearnings

Depreciationexpense

CurrentRateMethodCurrent/Non-currentmethodMonetary/Non-MonetarymethodTemporalMethodEquipmentCHHHLongTermReceivablesCHCCInventoriesCostCCHHMarketCCHCRetainedearningsBBBBDepreciationexpenseAHHH/A(3’)

五、CaseProblem1.AssumethataChinesecompanyGoldDragonhasthefollowingtransactionwithasupplierintheUSEagleCo.OnNovember15,2012,inventorywasacquiredfromEagleCo.for30000USDollars.Paymentisdueon15thJanuary,2013.Assumethespotexchangeratesfortherelevantdaysareasfollows:15thNovember,20121USD=6.0RMB31stDecember,20131USD=5.0RMB15thJanuary,20131USD=7.0RMBPleasewriteouttheentriesofGoldDragonrelatedtopurchasefromEagleCo.accordingtoone-transactionapproach.

1(1)November15,2011Dr:Inventory￥180000(2’)Cr:AccountsPayable￥180000(2)December31,2011Dr:AccountsPayable￥3000(2’)Cr:Inventory￥30001(3)January15,2012Dr:Inventory￥6000(2’)Cr:AccountsPayable￥6000(4)January15,2012Dr:AccountsPayable￥210000(2’)Cr:Cash（或bankdeposits）

￥210000

[或者：合并（3）、（4）Dr:AccountsPayable￥150000(4’)Inventory￥6000Cr:Cash（或bankdeposits）

￥210000]2.IfacompanyinChinahas8000Australiandollar,andneedstoconvertthemtoEuro.AssumingthatthecurrentforeignexchangeratesinBankofChinawhentheexchangecommencedareasfollowing：

BidRateAskRateAUD100RMB￥600RMB￥700EUR100RMB￥800RMB￥900CalculatehowmuchEurothiscompanycanconvertfrom8000AustralianDollars?Pleasewriteoutyourcalculation.2toconvert$8000AustraliandollartoEuro,itneedstouseAustraliandollartobuyRMBfirst,thenuseRMBtobuyEuro.①AUD8000x(600/100)

=RMB48000(5’)②RMB48000/(900/100)

=EUR5333.33(5’)(或者AUD8000x(600/900)

=

EUR5333.3310’)

3.BelowisasectionoftheconsolidatedbalancesheetofMendeleyCorporation(U.K.)fromthecompany's2012annualreport.TranslatetheGBPbalancesheetofMendeleyCorporationintoU.S.dollarsusingfourdifferenttranslationsmethods,andfilltheresultsintorightsideoftableprovidedintheanswersheet.CurrentExchangeRate:1GBP=2USDHistoricalExchangeRate:1GBP=1USDCalculate①

to

⑧,andthenexplainwhichofthefourforeigncurrencymethodswouldMendeleyCorporationprefer?3Answer:MendeleyCorporationwouldprefertouseCurrent/Non-currentMethod,becauseonlywiththismethod,ithaspositivebalancefromthetwoaccountslisted.(Inventories-Marketisasset,whereasLong-termDebtisliability,andthebalanceofthesetwoitemsusingasset–liabilitywitheachmethodis:-20000,10000,-40000,-20000)AccountsOriginalCurrentRateMethodCurrent/Non-currentMethodMonetary/Non-MonetaryMethodTemporalMethodInventories–MarketGBP20000USD40000USD40000USD20000USD40000Long-termDebtGBP30000USD60000USD30000USD60000USD600004.GatorCorporation(U.S.)purchasedequipmentworth2millionSwissfrancsfromHoldstet(Switzerland)atthebeginningoftheyear.ThetransactionwasdenominatedinSwissfrancs.TheexchangerateatthattimewasUS$0.65=1SFr.However,duetoastrongereconomy,theSwissfranchadstrengthenedagainsttheU.S.dollarresultinginanexchangerateofUS$0.70=1SFratyearend.(1)Determinethetransactiongain/lossthatGatorCorporationwillreportinitsyear-endincomestatement.(2)Determinethetransactiongain/lossthatHoldstetCorporationwillreportinitsyear-endincomestatementandgiveyourreasons.4

(1)Loss(2’)2,000,000*(0.7-0.65)=100,000(3’)(2)0(2’)becausethistransactioninHoldstetCorporationisn’tforeigncurrencytransaction.(3’)

5.AssumethataU.S.companyhasthefollowingtransactionwithasupplierinJapan.OnNovember15,2012,inventorywasacquiredfromSatohcom.for10,000,000JapaneseYen.PaymentisdueonJanuary15,2013.Theindirectspotexchangeratesfortherelevantdaysareasfollows:November15US$1=130yenDecember31US$1=125yenJanuary15US$1=120yen（紅字部分變成：AskRate BidRateUS$1=125yen US$1=120yen

US$1=120yen US$1=115yen

取AskRatePleasewriteouttheentriesrelatedtopurchasefromSatohcom.accordingtotwo-transactionapproach.5(1)Dr:Inventory76923.08(3’)

Cr:AccountsPayable76923.08(2)Dr.Exchangegainsandlosses3076.92(3’)（或Dr:Foreignexchangelosses）Cr.AccountsPayable3076.925(3)Dr.Exchangegainsandlosses3333.33(2’)Cr.AccountsPayable3333.33(4)Dr.AccountsPayable83333.33(2’)Cr.Cash83333.33Or,(3)(4)canbecombinedintooneentry:(4’) Dr:AccountsPayable80000Exchangegainsandlosses3333.33Cr:Cash83333.33

6．Information:ImportantfinancialdatafortheChinesesubsidiaryofPearCompany(U.S.)forthe2011fiscalyearisshownbelow:a)NetSales………… 8,000(millionsRMB)b)GrossProfit……… 5,000(millionsRMB)c)IncomebeforeTaxes………………2,100(millionsRMB)d)NetIncome…………1,500(millionsRMB)Assumethefollowingaverageexchangeratesfortheyear(ChineseYuanperU.S.dollars):1.￥8.0 2.￥7.0 3.￥9.0 4.￥6.0Demand:Usingeachexchangerate,makeatableconvertinga),b),c),andd)intoU.S.dollars.DeterminewhichexchangerateproducesthemostfavorableresultsinU.S.dollars?

6iv. Thelowest$1=￥6rate,providethemostfavorableresult,becauseitwillshowthebiggestincomeforPearcompany.(2’)(millionsRMB)0.5’x16$1=￥8.0

$1=￥7.0$1=￥9.0$1=￥6.0a)NetSales8,000$1,000$1,142.88$888.89$1,333.33b)GrossProfit5,000$625$714.26$555.56$833.33c)IncomebeforeTaxes2100$262.5$300$233.33$350d)NetIncome1,500$187.5$214.29$166.67$250

7.AU.S.firmimportsequipmentfromGermanyonMarch1for€300000whentheexchangerateis$1.3112/euro.PaymentineurodoesnothavetobemadeuntilApril30.March31:theexchangerateis$1.3500/euroApril30:theexchangerateis$1.3300/euroPleasewriteouttheentriesoftheU.S.firmrelatedtopurchasefromGermanyaccordingtotwo-transactionapproach.7March1:Purchases393360AccountsPayable393360(3’)March31:Foreignexchangeloss11640AccountsPayable11640(3’)April30:Accountspayable405000Cash399000Foreignexchangegain6000(4’)8.IftheU.S.firmistheexporters,otherinformationisthesameasaboveinquestion1,PleasewriteouttheentriesoftheU.S.firmrelatedtoselltoGermanyaccordingtotwo-transactionapproach.March1:Accountsreceivable393