Question #20 - Reading 10 Multinational Operations

Reading: Reading 10 Multinational Operations

PDF File: Reading 10 Multinational Operations.pdf

Page: 11

Status: Incorrect

Correct Answer: A

Your Answer: B

Shared Context

- To reflect the results of Grande, Inc., in its financial statements, it would be most appropriate for Giant Company to use the: A) current rate method followed by the temporal method. B) temporal method. C) current rate method.

Question

The Net Income of Grande, Inc., expressed in U.S. dollars for the year ended December 31, 2012, is closest to:

Answer Choices:

A. $250,000

B. $550,000

C. $500,000

Explanation

Using the current rate method, the income statement is translated using the average rate for all income statement accounts: Sales − COGS − Depreciation = Net Income. (60,000,000 × $0.11) − (45,000,000 × $0.11) − (10,000,000 × $0.11) = $550,000.

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