Quiz Question
What major change did the SEC allow in 2008 with respect to IFRS?
a. U.S. registrants are required to use IFRS.
b. Foreign registrants are now required to use U.S. GAAP if their shares are traded in the U.S.
c. U.S. registrants may use IFRS without reconciliation to U.S. GAAP.
d. Foreign registrants may use IFRS without reconciliation to U.S. GAAP.
Which of the following is NOT an indicator that a U.S. parent’s currency should be the functional currency?
a. Sales contracts denominated in U.S dollars.
b. Raw materials purchased from vendors in the U.S.
c. Sales contracts denominated in subsidiary’s currency.
d. Labor costs of factory workers in the U.S. producing inventory.
Which of the following statements is false?
a. Translation is always into U.S. dollars.
b. Remeasurement results in a change of accounting principle.
c. After remeasurement into the functional currency, it is sometimes necessary to
translate to U.S. dollars if the functional currency is not the U.S. dollar.
d. Translation is more common than remeasurement.
e. Translation uses the current rate method.
Assignment
Research the most current accounting standards on determining an entity’s functional currency using the Accounting Standards Codification.
Garry has asked you, as an accountant in the controller’s department, to research the functional currency issue.
Write a memo to him, reporting the results of your research. Support your recommendations with citations and quotations from the authoritative financial reporting standards.
The memo should be at least two pages in length.
