Q

CFA Level II
#1
  1. Which of these statements is correct when a foreign subsidiary operates in a hyperinflation economy? A) IFRS requires foreign currency financial statements of foreign entities to be translated using the temporal method. B) U.S. GAAP requires foreign currency financial statements of foreign entities to be restated for inflation and then translated using the historical exchange rate. C) IFRS requires foreign currency financial statements of foreign entities to be restated for inflation and then translated using the current exchange rate. 2) Which of these statements is correct? A) Holding cash and receivables during a period of inflation results in a purchasing power gain. B) Holding payables during inflation results in a purchasing power gain. C) Holding cash, receivables and payables during inflation results in a purchasing power loss. 3) The form of accounting approach that states that non-owner changes in stockholders’ equity, such as translation adjustments, should be included in the determination of net income: A) clean-surplus accounting B) economic accounting C) actual-translation accounting 4) _________________ item refers to the currency translation adjustment that arises when the current rate method is used to translate the foreign currency financial statements of foreign operations that have been determined to have a foreign currency as their functional currency. 5) Which of these statements is correct? A) Under IFRS only, companies are required to separately disclose the component of translation gain or loss arising from foreign currency transactions and the component arising from application of the temporal method. B) Under US GAAP only, companies are required to separately disclose the component of translation gain or loss arising from foreign currency transactions and the component arising from application of the temporal method. C) Under both US GAAP and IFRS, companies are not required to separately disclose the component of translation gain or loss arising from foreign currency transactions and the component arising from application of the temporal method.
#2
  1. C 2. B 3. A 4. ? 5. C
#3

1C 2B 3A 4?? 5C

#4

1C 2B 3A 4 Translational Gain/Loss 5C

#5

Correct Answers: 1. C 2. B 3. A 4. Dirty-surplus item 5. C

#6

Damil4real Wrote: ------------------------------------------------------- > Correct Answers: > > 4. Dirty-surplus item huh?

#7

wake2000 Wrote: ------------------------------------------------------- > Damil4real Wrote: > -------------------------------------------------- > ----- > > Correct Answers: > > > > > 4. Dirty-surplus item > > > huh? haha! I guess you need to read the FRA section again dude.