Multiple Choice Questions 1. A German subsidiary of a U.S. parent reports its accounts in euros. Its

Question:

Multiple Choice Questions
1. A German subsidiary of a U.S. parent reports its accounts in euros. Its functional currency, however, is the Swedish krona. You are responsible for changing the subsidiary's accounts into U.S. dollars in preparation for consolidation. Which statement is true regarding this procedure?
a. Remeasure the subsidiary's euro accounts into krona and then translate the krona accounts into U.S. dollars.
b. Translate the subsidiary's euro accounts into krona and then remeasure the krona accounts into U.S. dollars.
c. Remeasure the subsidiary's euro accounts into U.S. dollars.
d. Translate the subsidiary's euro accounts into U.S. dollars.
2. At the end of 2014, an Italian subsidiary of a U.S. parent reports €1,000,000 in equipment purchased when the was $l .40, and €3,000,000 in equipment purchased when the was $ 1.50. The average for 2014 is $1.35, and the beginning and ending rates for 2014 are $1.42 and $1.31, respectively. If the Italian subsidiary's functional currency is the U.S. dollar, the equipment account, in U.S. dollars, is
a. $5,240,000
b. $5,350,000
c. $5,400,000
d. $5,900,000
Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...