Final LONG TERM EXAMINATION IN BSA COURSE PDF

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FINAL LONG TERM EXAMQuestion 1 If the U. dollar is the currency in which the foreign affiliate's books and records are maintained, and the U. dollar is also the functional currency, no restatement is requiredQuestion 2 Certain balance sheet accounts of a foreign subsidiary of the Beagle Co.. had bee...

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FINAL LONG TERM EXAM Question 1 If the U.S. dollar is the currency in which the foreign affiliate's books and records are maintained, and the U.S. dollar is also the functional currency, no restatement is required Question 2 Certain balance sheet accounts of a foreign subsidiary of the Beagle Co.. had been stated in U.S. dollars as follows: Stated at Accounts receivable current Accounts receivable - longterm Prepaid insurance Goodwill Totals

Current rates

Historical rates

$280,000

$308,000

140,000

154,000

70,000 112,000 $602,000

77,000 119,000 $658,000

If the U.S. dollar is the functional currency of this subsidiary, what total should have been included in Beagle’s balance sheet for the items above? $616,000

Question 3 On January 01, 2021, Peanut Garlic Inc., a small and medium enterprise (SME), invested P500,000 cash in a joint venture for 50% interest. For the year ended December 31, 2021, the joint venture reported net income of P200,000 and distributed a cash dividend in the amount of P60,000. As of December 31, 2020, the fair value of the investment in joint venture is P600,000 and the estimated cost of disposal is 10% of fair value. The value in use of the investment is estimated at P550,000. Under IFRS for SMEs, what is the book value of Investment in Joint Venture to be reported by Peanut Garlic Inc. as of December 31, 2021 if the SMS elects cost method? 500,000

Question 4

A bank dealing in foreign currency tells you that the foreign currency will buy you Php0.80. The bank has given you A direct quote

Question 5 A US parent makes a Php1,000,000 loan worth $108,250 to its Philippine-based subsidiary in the current year. The loan is denominated in US dollars and the functional currency of the subsidiary is the Php. This intercompany transaction is a foreign currency transaction of the subsidiary but not the parent Question 6 Bullish Sheet Neighbor Corp. (BSNC) owns 90% of the capital stock of a foreign subsidiary located in Ireland. As a result of translating the subsidiary's accounts, a debit of $160,000 was needed in the translation adjustments account so that the foreign subsidiary's debits and credits were equal in U.S. dollars. How should BSNC report its translation adjustments on its As a $144,000 reduction in consolidated comprehensive net income.

Question 7 On January 01, 2021, Vaselane Inc. invested P2,000,000 cash in a joint venture for 50%. For the years ended December 31, 2021, 2022, and 2021, the joint venture reported the following net incomes and dividend distributions: Year Net Income / (Net Loss) Dividend Distribution 2021 P1,000,000 P300,000 2022 -6,000,000 0 2023 7,000,000 500,000 What is the book value of Investment in Joint Venture to be reported by Vaselane Inc. as of December 31, 2022? 2,600,000

Question 8 On January 01, 2021, Peanut Garlic Inc., a small and medium enterprise (SME), invested P500,000 cash in a joint venture for 50% interest. For the year ended December 31, 2021, the joint venture reported net income of P200,000 and distributed a cash dividend in the amount of P60,000. As of December 31, 2020, the fair value of the investment in joint venture is P600,000 and the estimated cost of disposal is 10% of fair value. The value in use of the investment is estimated at P550,000. Under IFRS for SMEs, what is the book value of Investment in Joint Venture to be reported by Peanut Garlic Inc. as of December 31, 2021 if the SME elects equity method? 550,000

Question 9 On January 01, 2021, Peanut Garlic Inc., a small and medium enterprise (SME), invested P500,000 cash in a joint venture for 50% interest. For the year ended December 31, 2021, the joint venture reported net income of P200,000 and distributed a cash dividend in the amount of P60,000. As of December 31, 2020, the fair value of the investment in joint venture is P600,000 and the estimated cost of disposal is 10% of fair value. The value in use of the investment is estimated at P550,000. Under IFRS for SMEs, what is the book value of Investment in Joint Venture to be reported by Peanut Garlic Inc. as of December 31, 2021 is the SME elects fair value method?ou Answered 600,000

Question 10 Certain balance sheet accounts of a foreign subsidiary of Sinoite Valor Company (SINOVAC) at December 31, 2020, have been restated into U.S. dollars as follows: Restated at Current Rates Historical Rates Cash $47,500 $45,000 Accounts receivable 95,000 90,000 Inventory, at market 76,000 72,000 Land 57,000 54,000 Equipment (net) 142,500 135,000 $418,000 $396,000 Assuming the functional currency of the subsidiary is the U.S. dollar, what total should be included in SINOVAC consolidated balance sheet at December 31, 2020, for the above items? $407,500 Question 11 All of the following stockholders' equity accounts of a foreign subsidiary are translated at historical exchange rates except: retained earnings Question 12 A subsidiary of Hairy Porter Inc., a US Company, was located in a foreign country. The functional currency of this subsidiary was the Philippine Peso (Php). The subsidiary acquired inventory on credit on November 1, 2020, for Php120,000 that was sold on January 17, 2021 for Php156,000. The subsidiary paid for the inventory on January 31, 2021. Currency exchange rates between the dollar and the Php (theoretically) were as follows: November 1, 2020 $.19 = Php 1 December 31,2020 $.20 = Php1

January 1, 2021 $.22 = Php1 January 31, 2021 $.23 = Php1 Average for 2021 $.24 = Php1 What figure would have been reported for this inventory on Porter's consolidated balance sheet at December 31, 2020? $24,000

Question 13 When an economic transaction is denominated in a currency other than the entity’s domestic currency, the entity must establish a Rate of exchange

Question 14 If a US company wants to hedge a prospective loss in a foreign entity from a foreign currency fluctuation, which of the following actions is recommended? The US company should borrow money in the foreign entity’s local country.

Question 15 A subsidiary of Hairy Porter Inc., a US Company, was located in a foreign country. The functional currency of this subsidiary was the Philippine Peso (Php). The subsidiary acquired inventory on credit on November 1, 2020, for Php120,000 that was sold on January 17, 2021 for Php156,000. The subsidiary paid for the inventory on January 31, 2021. Currency exchange rates between the dollar and the Php (theoretically) were as follows: November 1, 2020 $.19 = Php 1 December 31,2020 $.20 = Php1 January 1, 2021 $.22 = Php1 January 31, 2021 $.23 = Php1 Average for 2021 $.24 = Php1

What figure would have been reported for cost of goods sold on Porter's consolidated income statement at December 31, 2021? $28,800

Question 16 On January 01, 2021, Vaselane Inc. invested P2,000,000 cash in a joint venture for 50%. For the years ended December 31, 2021, 2022, and 2021, the joint venture reported the following net incomes and dividend distributions:

Year Net Income / (Net Loss) Dividend Distribution 2021 P1,000,000 P300,000 2022 -6,000,000 0 2023 7,000,000 500,000 What is the share in net loss or investment loss to be reported by Vaselane Inc. for the year ended December 31, 2022? 2,350,000

Question 17 Certain balance sheet accounts of a foreign subsidiary of Sinoite Valor Company (SINOVAC) at December 31, 2020, have been restated into U.S. dollars as follows: Restated at Current Rates Historical Rates Cash $47,500 $45,000 Accounts receivable 95,000 90,000 Inventory, at market 76,000 72,000 Land 57,000 54,000 Equipment (net) 142,500 135,000 $418,000 $396,000 If the current rate used to restate these balances is $.95, what was the historical rate used to restate the same balances? $.90 Question 18 Which of the following assets and/or liabilities are considered monetary? Cash and Accounts Payable

Question 19 Certain balance sheet accounts of a foreign subsidiary of the Beagle Co.. had been stated in U.S. dollars as follows: Stated at Current rates Accounts receivable $280,000 current Accounts receivable - long140,000 term Prepaid insurance 70,000

Historical rates $308,000 154,000 77,000

Goodwill Totals

112,000 $602,000

119,000 $658,000

If a foreign currency is the functional currency of this subsidiary, what total should have been included in Beagle’s balance sheet for the preceding items? $602,000 Question 20 The gain or loss on the effective portion of a U.S. parent company's hedge of a net investment in a foreign entity should be treated as: other comprehensive income

Question 21 Certain balance sheet accounts of a foreign subsidiary of Sinoite Valor Company (SINOVAC) at December 31, 2020, have been restated into U.S. dollars as follows: Restated at Current Rates Historical Rates Cash $47,500 $45,000 Accounts receivable 95,000 90,000 Inventory, at market 76,000 72,000 Land 57,000 54,000 Equipment (net) 142,500 135,000 $418,000 $396,000 Assuming the functional currency of the subsidiary is the local currency, what total should be included in SINOVAC consolidated balance sheet at December 31, 2020, for the above items? $418,000

Question 22 On November 15, 2020, Balmond Company purchased merchandise worth 100,000 Swiss francs from its Swiss supplier payable within 30 days under an open account agreement. Balmond issued a 30-day 6% note payable in Swiss francs. On December 15, 2020, Balmond paid the note in full. The following spot rates are provided: Selling Buying November 15, 2020 P24.03 P24.15 December 15, 2020 P24.15 P24.22 How much is the loss on the payment to the Swiss supplier did Balmond recognize? 12,000

Question 23 On December 1, 2020, JIYONG Corporation, a firm engaged in international trade located in the Philippines, sold goods on account to a company in California, USA at a price of $5,000 collectible on March 2, 2021. In order to hedge this foreign currency asset exposure, JIYONG Corporation entered into a forward contract with a bank for the sale of $5,000 to be delivered on March 2, 2021. The following direct exchange rates are provided by the bank:

Bid spot rate Offer spot rate Buying forward-30 days Selling forward-30 days Buying forward-60 days Selling forward-60 days Buying forward-90 days Selling forward-90 days

12/1/2020 P55 P51

12/31/2020 P47 P53

3/2/2021 P44 P55

P48

P42

P45

P44

P41

P46

P53

P45

P56

P50

P51

P53

P52

P50

P48

P45

P50

P46

What is the remeasured amount of the monetary asset of JIYONG Corporation as of December 31, 2020? 235,000 Question 24 On December 1, 2020, JIYONG Corporation, a firm engaged in international trade located in the Philippines, sold goods on account to a company in California, USA at a price of $5,000 collectible on March 2, 2021. In order to hedge this foreign currency asset exposure, JIYONG Corporation entered into a forward contract with a bank for the sale of $5,000 to be delivered on March 2, 2021. The following direct exchange rates are provided by the bank:

Bid spot rate Offer spot rate Buying forward-30 days

12/1/2020 P55 P51

12/31/2020 P47 P53

3/2/2021 P44 P55

P48

P42

P45

Selling forward-30 days Buying forward-60 days Selling forward-60 days Buying forward-90 days Selling forward-90 days

P44

P41

P46

P53

P45

P56

P50

P51

P53

P52

P50

P48

P45

P50

P46

What is the foreign currency gain (loss) of the derivative instrument to be recognized by JIYONG Corporation in the December 31, 2020 financial statement? 35,000 gain Question 25 In translating the financial statements of a foreign operation into the presentation currency of the reporting entity, assets and liabilities are translated a Closing rate Question 26 At what rate should gain on sale of noncurrent assets on December 1, 2020 be translated when the functional currency figures are being translated into a different presentation currency? Spot rate at the date of transaction

Question 27 On December 1, 2020, JIYONG Corporation, a firm engaged in international trade located in the Philippines, sold goods on account to a company in California, USA at a price of $5,000 collectible on March 2, 2021. In order to hedge this foreign currency asset exposure, JIYONG Corporation entered into a forward contract with a bank for the sale of $5,000 to be delivered on March 2, 2021. The following direct exchange rates are provided by the bank:

Bid spot rate Offer spot rate Buying forward-30 days Selling forward-30 days Buying forward-60

12/1/2020 P55 P51

12/31/2020 P47 P53

3/2/2021 P44 P55

P48

P42

P45

P44

P41

P46

P53

P45

P56

days Selling forward-60 days Buying forward-90 days Selling forward-90 days

P50

P51

P53

P52

P50

P48

P45

P50

P46

What is the foreign currency gain (loss) on the hedging instrument to be recognized by JIYONG Corporation? 5,000 gain

Question 28 Under PAS 21, which of the following statements pertains to functional currency? You Answered It refers to the currency of the primary economic environment in which the parent entity operates. It refers to the currency other than the functional currency of the entity. It refers to the type of currency in a given jurisdiction which a creditor may be compelled to accept. It refers to the currency in which the financial statements are presented. None of the above

Question 29 Apple Inc. and Samsung Inc. incorporated an entity named Sample Inc., wherein the parties will have equal voting rights in the decision affecting the relevant activities of the arrangement. The contract provides that unanimous consent by the parties is necessary for the validity of Samples corporate act. The purpose of the arrangement is for Sample Inc. to manufacture parts for the parties manufacturing processes. The assets and liabilities held in Sample Inc. are in the name of Sample Inc. What is the classification of the interest of Apple Inc. and Samsung Inc. in Sample Inc. based on Sample Inc.’s legal form only? It shall be classified as Joint Arrangement accounted for as Investment in Joint Venture under Equity Method because Sample Inc. holds title over the assets of the venture

Question 30 On December 1, 2020, TayTay Co., a trading company in the Philippines anticipated the purchase of merchandise from a vendor in Nevada at a price of $1,200. The purchase would probably occur on March 31, 2021. On the same date, TayTay purchased a 120-day call option

from a writer to buy $1,200 at an exercise price of P50 by paying a premium of P800. The highly probable transaction occurred on the date anticipated. For the year ended December 31, 2021, only 40% of purchased inventories from the foreign vendor were unsold to third person. The following additional data are provided:

Market price Fair value of option

12/1/2020 P50

12/31/2020 3/31/2021 P52 P55

?

P3,000

?

What is the foreign currency gain (loss) to be recognized in other comprehensive income for the year ended December 31, 2020? 2,400 gain Question 31 On December 1, 2020, TayTay Co., a trading company in the Philippines anticipated the purchase of merchandise from a vendor in Nevada at a price of $1,200. The purchase would probably occur on March 31, 2021. On the same date, TayTay purchased a 120-day call option from a writer to buy $1,200 at an exercise price of P50 by paying a premium of P800. The highly probable transaction occurred on the date anticipated. For the year ended December 31, 2021, only 40% of purchased inventories from the foreign vendor were unsold to third person. The following additional data are provided:

Market price Fair value of option

12/1/2020 P50

12/31/2020 3/31/2021 P52 P55

?

P3,000

?

What is the net foreign currency gain to be recognized in profit or loss for the year ended December 31, 2021? 3,000 Question 32 AIIYL Corporation issued a promissory note denominated in foreign currency for the purchase made from a supplier in South Korea on December 1, for a 60-day, 18% promissory note for 108,000 FC, at a selling rate of 1FC to P74.20. On December 31, the selling spot rate is 1FC to P74.85. On January 30, the selling spot rate is 1FC to P75.75. On the settlement date, how much is the foreign exchange gain/loss? P98,658 loss

Question 33 The relationship between parties that signifies the existence of a joint arrangement is: joint control by the parties over the activities of an operation Question 34 Hargreeves Company purchased merchandise for 300,000 pounds from a foreign vendor on November 30, 2020. Payment in foreign currency (FC) was due on January 30, 2021. The exchange rates for the foreign currency were as follows: December 31, November 30, 2020 2020 Spot rate FC 1.65 FC 1.62 30-day rate FC 1.64 FC 1.59 60-day rate FC 1.63 FC 1.56 In its December 31, 2020 income statement, what is the amount to be reported by Hargreeves Company as foreign exchange difference? P3,367 loss Question 35 On November 15, 2020, Balmond Company purchased merchandise worth 100,000 Swiss francs from its Swiss supplier payable within 30 days under an open account agreement. Balmond issued a 30-day 6% note payable in Swiss francs. On December 15, 2020, Balmond paid the note in full. The following spot rates are provided: Selling Buying November 15, 2020 P24.03 P24.15 December 15, 2020 P24.15 P24.22 What amount would be recognized to interest expense in relation to the foreign currency transaction? 12,075

Question 36 Joint Arrangements, provides that joint control exists where no single party is in a position to control the activity unilaterally

For the next 6 questions: During July 2020, Lancer Corporation had the following transactions with foreign businesses: Date

Nature of Transaction

Billing

Exchange

Currency Rate Vendor A: 7/1/20 7/10/20 7/31/20 Customer A: 7/15/20 7/20/20 7/30/20

Imported merchandise costing 100,000 rupees from Pakistan wholesaler Paid 40% of amount owned Paid remaining amount owned

Sold merchandise for 50,000 pound to Syrian wholesaler Received 20% payment Received remaining amount owned

Rupee

P0.82 0.83 0.78

Syrian Pound

P0.95 0.90 0.91

Question 37 What is the capitalized cost of inventory purchase from the Syrian wholesaler? Zero

Question 38 What is the foreign exchange difference on July 31, 2020 transaction arising from the Pakistan wholesaler? 2,400 gain Question 39 What is the foreign exchange difference on July 30, 2020 transaction arising from the Syrian wholesaler? 1,600 loss

Question 40 What is the foreign exchange difference on July 20, 2020 transaction arising from Syrian wholesaler? 500 loss Question 41 What is the foreign exchange difference on July 10, 2020 transaction arising from the Pakistan wholesaler? 400 loss

Question 42 What is the reportable sales amount in the income statement in 2020?ect! 47,500...