1- Dover Company owns 90% of the capital stock of a foreign subsidiary located in Italy. Dover's accountant has just translated the accounts of the foreign subsidiary and determined that a debit translation adjustment of $80,000 exists. If Dover uses the equity method for its investment, what entry should Dover record in order to recognize the translation adjustment?

Select one:

a. Debit Other Comprehensive Income-Translation Adjustment for $72,000 and credit Investment in Italian Subsidiary for $72,000.

b. Debit Other Comprehensive Income-Translation Adjustment for $80,000 and credit Investment in Italian Subsidiary for $80,000.

c. Debit Investment in Italian Subsidiary for $80,000 and credit Other Comprehensive Income-Translation Adjustment for $80,000.

d. Debit Investment in Italian Subsidiary for $72,000 and credit Other Comprehensive Income-Translation Adjustment for $72,000.

2-

Hershey Company has two foreign subsidiaries. One is located in France, the other in England. Hershey has determined the U.S. dollar is the functional currency for the French subsidiary, while the British pound is the functional currency for the English subsidiary. Both subsidiaries maintain their books and records in their respective local currencies. What process and method will Hershey use to convert each of the subsidiary's financial statements into U.S. Dollars?

Select one:

a.

	English Subsidiary’s Financial Statements		French Subsidiary’s Financial Statements
	Process	Method	Process	Method
	Remeasur-ement	Current Rate	Translation	Temporal

b.

	English Subsidiary’s Financial Statements		French Subsidiary’s Financial Statements
	Process	Method	Process	Method
	Remeasur-ement	Temporal	Translation	Current Rate

c.

	English Subsidiary’s Financial Statements		French Subsidiary’s Financial Statements
	Process	Method	Process	Method
	Translation	Current Rate	Remeasur-ement	Temporal

d.

	English Subsidiary’s Financial Statements		French Subsidiary’s Financial Statements
	Process	Method	Process	Method
	Translation	Temporal	Remeasur-ement	Current Rate

Answer rating: 100% (QA)

a Debit Other Comprehensive IncomeTranslation Adjustment for 72000 and credit Investment in It... View the full answer