Multiple Choice Questions 1. A U.K.parent has a wholly owned subsidiary in Mexico, whose functional currency is

Question:

Multiple Choice Questions
1. A U.K.parent has a wholly owned subsidiary in Mexico, whose functional currency is the Mexican peso. the subsidiary reports plant and equipment of 10,000,000 pesos at the end of 2014. The Mexican economy is determined to be hyperinflationary at the beginning of 2014. The peso is worth £0.01 at the end of 2014. The plant and equipment was acquired when the was £0.05. The general price-level index for Mexico rose from 100 to 400 during the time the subsidiary held the plant and equipment. The translated plant and equipment, following IFRS and U.S. , is
a. £500,000 under IFRS and £500,000 under U.S. .
b. £400,000 under IFRS and £500,000 under U.S. .
c. £500,000 under IFRS and £100,000 under U.S. .
d. £400,000 under IFRS and £100,000 under U.S. .
2. IFRS conversion of an international subsidiary's accounts to the parent's presentation currency is the same as U.S. for non-hyperinflationary functional currencies,
a. with the exception that remeasurement gains and losses are reported in OCI.
b. with the exception that translation gains and losses are reported in income.
c. with the exception that translation is the only option; remeasurement is not allowed.
d. with no differences.
GAAP
Generally Accepted Accounting Principles (GAAP) is the accounting standard adopted by the U.S. Securities and Exchange Commission (SEC). While the SEC previously stated that it intends to move from U.S. GAAP to the International Financial Reporting Standards (IFRS), the... 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...