Choose the best answer for each of the following questions.

1			If a parent company bills all sales to a foreign subsidiary in U.S. dollars and is to be paid in U.S. dollars, the balance of the Intercompany Purchases ledger account in the subsidiary's income statement is remeasured to U.S. dollars, the functional currency, by the use of the:
			A)	Average exchange rate for the accounting period
			B)	Exchange rate at the beginning of the period
			C)	Exchange rate at the end of the period
			D)	Balance of the parent company's Intercompany Sales ledger account for sales to the foreign subsidiary
2			Erie Corporation acquired with U.S. dollars all the outstanding common stock of Manitoba Company, a Canadian corporation whose functional currency is the U.S. dollar. On the date of the business combination, a portion of the balance of Erie's Investment in Manitoba Company Common Stock ledger account was allocable to goodwill. One year later, after an exchange rate decrease between the U.S. dollar and the Canadian dollar, the unimpaired goodwill is carried in the consolidated balance sheet of Erie Corporation and subsidiary at:
			A)	An increased amount
			B)	The same amount
			C)	A lesser amount
			D)	An increased or a lesser amount, depending on management's policy
3			The current/noncurrent and monetary/nonmonetary methods of foreign currency translation differ principally in the translation of:
			A)	Sales and cost of goods sold
			B)	Depreciation expense and cost of goods sold
			C)	Inventories and cost of goods sold
			D)	Amortization expense and cost of goods sold
4			Which of the following statements about the current rate method of foreign currency translation is correct?
			A)	It is generally accepted in the United States.
			B)	It emphasizes the reporting currency aspects of a foreign investee's operations.
			C)	It requires use of the current exchange rate for translating all financial statement amounts of the foreign investee.
			D)	None of the foregoing
5			Delnora Company owns a foreign subsidiary with 3,600,000 local currency units (LCU) of plant assets before accumulated depreciation on December 31, 2002. Of this amount, LCU2,400,000 were acquired in 2000, when the exchange rate was LCU1.6 to $1, and LCU1,200,000 were acquired in 2001, when the exchange rate was LCU1.8 to $1. The exchange rate in effect on December 31, 2002, was LCU2 to $1. The weighted average of exchange rates that were in effect during 2002 was LCU1.92 to $1. Assuming that the plant assets are depreciated by the straight-line method over a 10-year economic life with no residual value, how much depreciation expense relating to the foreign subsidiary's plant assets is reported in Delnora's income statement for 2002 if the U.S. dollar is the functional currency of the subsidiary?
			A)	$180,000
			B)	$187,500
			C)	$200,000
			D)	$216,667
			E)	Some other amount
6			Jemco, Inc., used the current rate method for translating foreign currency amounts on December 31, 2002. On that date, Jemco had foreign subsidiaries with 1,500,000 local currency units (LCU) in long-term receivables and LCU2,400,000 in long-term debt. The exchange rate in effect when the specific transactions occurred involving those foreign currency amounts was LCU2 to $1. The exchange rate in effect on December 31, 2002, was LCU1.5 to $1. The translation of the foregoing foreign currency amounts to U.S. dollars on December 31, 2002, results in long-term receivables and long-term debt, respectively of:
			A)	$750,000 to $1,200,000
			B)	$750,000 to $1,600,000
			C)	$1,000,000 to $1,200,000
			D)	$1,000,000 to $1,600,000
			E)	Some other amounts
7			How are foreign currency translation adjustments resulting from translating foreign currency financial statements to U.S. dollars currently reported?
			A)	Displayed as an ordinary item in the income statement for the accounting period in which the exchange rate changes
			B)	Displayed as an extraordinary item in the income statement for the period in which the exchange rate changes
			C)	Displayed in the stockholders' equity section of the balance sheet
			D)	Displayed as an ordinary item in the income statement for losses, but deferred in the balance sheet for gains
			E)	Displayed in none of the foregoing ways
8			In the remeasurement of the trial balance of a foreign branch to its U.S. dollars functional currency, the average exchange rate for the accounting period is applied to the balance of which ledger account?
			A)	Sales
			B)	Notes Payable
			C)	Home Office
			D)	Accumulated Depreciation
9			The current/noncurrent method of foreign currency translation is consistent with the historical cost valuation principle.
			A)	True
			B)	False
10			In the monetary/nonmonetary method of foreign currency translation, cost of goods sold is translated at an average exchange rate for the accounting period.
			A)	True
			B)	False
11			For an entity with operations that are relatively self contained and integrated within a particular country, the functional currency would be the currency of that country.
			A)	True
			B)	False
12			An entity's functional currency is the currency of the primary economic environment in which the entity operates; normally, that is the currency of the environment in which an entity primarily generates and expends cash.
			A)	True
			B)	False
13			Historical rate is the exchange rate in effect on the balance sheet date of the foreign entity.
			A)	True
			B)	False