7

After translating Consol - Con's inventory and long-term debt into the parent currency (US$), the amounts reported on consolidated motors

financial statements at 31 December 2007 would be closest to (in million)

A. $71 for inventory and $161 for long -term debt

B. $71 for inventory and $166 for long -term debt

C. $73 for inventory and $166 for long -term debt

8

After translating Consol - Con's 31 December 2007 balance sheet into the parent currency, the translated value of retained earnings will be closest to:

A. $41 million

B. $44 million

C. $46 million

9

In response to the Board's first question, Templeton should reply that such a change would be most justified if:

A. the inflatio0n rate int the united states became hyperinflationary.

B. Management wanted to flow more of the gains through net income

C. Consol- Can were making autonomous decisions about operations, investing, and financing

10

In response to the Board's second question , Templeton should note that if the change is made, the consolidated financial:

statements for consolidated Motors would begin to recognize:

A. Realized gains and losses on monetary assets and liabilities

A. Realized gains and losses on nonmonetary assets and liabilities

C. Unrealized gains and losses on nonmonetary assets and liabilities

11

In response to the Board's third question , Templeton should note that the change will most likely affect:

A. The cahs ratio

B. fixed asset turnover

C. Receivables turnover

12

In response to the Board's fourth question , the balance sheet exposure (in C$ million) would be closest to :

A. -19

B. 148

C. 400

13

Based on the translation method being used for Julius, the subsidiary is most likely:

A. A sales outlet for romulus's products.

B. a self-contained, independent operating entity

C. Using the US dollar as its functional currency.

14

To account for its foreign operations, Romulus has most likely designated the Euro as the functional currency for:

a. Julius only

B. Augustus

C. both Julius and Augustus

15

When Romulus consolidates the results of Julius, any unrealized exchangerate holding gains on monetary assets should be:

A. reported as part of operating income

B. reported as a nonoperating item on the income statement

C. reported directly to equity as part of the cumulative translation adjustment

16

When Marks tranlates his forecasted balance sheet for Julius into the US dollars, total assets at 31 December 2008 (dollarsin millions)will closest to:

A. $1,429

B. $2,392

C. 3,703

17

When Marks coonverts his forecasted income statement data int US dollars, the 2008 gross profit margin for Julius will be closest to:

A. 39.1%

B. 40.9%

C. 44.6%

18

Relative to the gross margins the subsidiaries report in local currency, Romulus's consolidated gross margin most likely:

A. Will not be distorted by currency translations

B. Would be distorted if Augustus were using the same translation method as Julius

C. Will be distorted due to translation and inventory accounting methods Augustus is using

19

Compared to using the Singapore dollar as Acceletron's funtional currency for 2007, if the us dollar were the functional currency

it is most likely that Redline's consolidated:

A. inventories will be higher

B. receivable turnover will be lower

C. fixed asset turnoverwill be higher

20

If the US dollar were chosen as the functional currency for Acceleton' in 2007, Redline could reduce its balance sheet exposure to exchange rates by

A. selling SGD 30 of fixed assets for cash

B. Issuing SGD 30 of long -term debt to buy fixed assets

C. Issuing SGD 30 in short-term debt to purchase marketable securities

21

Redlin's consolidated gros profit margin for 2007 would be highest if Acceletron accounted for inventory using

A. FIFOand its funtional currency were the US dollar

B. LIFO and ists functional currency were the US dollar

C. FIFO, and its functional currency were the Singapore dollar

22

If the current rate method is used to translate Acceletron's financial statements into US dollars, Redlin's consolidated financial statements will

most likely include Acceletron:

A. $3,178 in revenue

B. $118 in long-term debt

C. Negative translation adjustment to shareholder equity

23

If Acceletron's financial statements are translated into US dollars using the temporal method, Redline's consolidated financial statements

will most likely include Acceletron's:

A. $336 in inventory

B.$ 956 in fixed assets

C. $152 in accounts receivable

24

When translating acceletron's financial statements into US dollars, Redline is least likely to use an exchange rate of USD per SGD

A. 0.671

B. 0.588

C. 0.654