2.

Under the temporal method, monetary assets and liabilities are translated by using
the exchange rate existing at the
c. Balance sheet date
(This technique of foreign currency translation is used when the local currency
of the subsidiary is not the same as the currency of the parent company.)

3. The process of translating the accounts of a foreign entity into its functional currency
when they are stated in another currency is called:

c. Remeasurement
(this is related to the definition of remeasurement)

4. Which of the following would be restated using the average exchange rate under the
temporal method?

d. None of the above

5. Paid-in capital accounts are translated using the historical exchange rate under:
c. Both the current rate and temporal methods
(In order to approximate the exchange rate in effect when the items were
recognized.)

6. Which of the following would be restated using the current exchange rate under the
temporal method?

a. Inventory carried at the market

(The current rate method is utilized in instances where the subsidiary isn't well
integrated with the parent company, and the local currency where the subsidiary
operates is the same as its functional currency.)

7. The translation adjustment that results from translating the financial statements of a
foreign subsidiary using the current rate method should be:

a. included as a separate item in the stockholders’ equity section of the

balance sheet
(When we report Common or Preferred stock, we also must include the details in
the accounts including par, no-par or stated value and shares authorized, issued
and outstanding.)

18. The objective of remeasurement is to:

d. None of the above

(to produce a set of remeasured financial statements as if all transactions
occurred in the functional currency)
22. When the functional currency is the foreign entity's currency:

d. All of the above

24. Assuming that a foreign entity is deemed to be operating in an environment

dominated by the local currency, the entity's assets are translated using

a. the current rate

(The current rate method is a standard method of currency translation that
utilizes the current market exchange rate.)

25. Assuming that a foreign entity is deemed to be operating in an environment

dominated by the local currency, the entity's capital stock is translated using

d. Historical rate

26. If the functional currency is determined to not be the foreign entity's local currency,
translation is done using

c. The remeasurement method

27. In most cases, which of the following is NOT a component of translated retained
earning?

b. Income from the period translated at the historical rate

28. Which of the following is NOT true regarding foreign statement translation using the
current or temporal method?

a. All assets and all liabilities are translated at the current exchange rate at
the date of translation

29. Which of the following is NOT considered when directly computing the translation
adjustment for foreign financial statements?

d. All are considered when directly computing the translation adjustment

41. PAS 21 requires which of the following disclosures from firms involved in foreign
currency transactions?

d. All are required disclosures