Acct 434- Mod 9 (Pereversoff)

Question 1

What are the two methods for translating financial statements?

Answer 1

Functional currency translation (FCT)

Presentation currency translation (PCT)

Question 2

Describe functional currency translation (FCT)

Answer 2

When the functional currency of the foreign operation is the same currency as that of the reporting entity

Question 3

Describe presentation currency translation (PCT)

Answer 3

Used to translate foreign operations financial statements from its functional currency to a different presentation currency

Question 4

Define Closing Rate

Answer 4

Spot exchange rate at end of reporting period

Question 5

Define Spot Exchange Rate

Answer 5

Exchange rate for immediate delivery

Question 6

Under the PCT method, where are gains/losses reported

Answer 6

OCI

Question 7

When translating a foreign entity, if revenue and expenses are earned or incurred evenly throughout the year, which rate should be used?

Answer 7

You can use an average rate