Question #98 - Reading 10 Multinational Operations

Reading: Reading 10 Multinational Operations

PDF File: Reading 10 Multinational Operations.pdf

Page: 54

Status: Unattempted

Shared Context

- The currency translation adjustment that results from the translation of South Sea's data is closest to? A) Zero because there is no currency translation adjustment under the current rate method. B) −3,300 USD. C) 21,600 USD.

Question

If the functional currency is the USD, then the net income before a translation gain/loss is closest to:

Answer Choices:

A. 8,000 USD

B. 4,700 USD

C. 34,100 USD

Explanation

Adjust the income statement by the appropriate rates. For COGS and depreciation, historical rates were given. Average rate is used for all others. LC Conversion USD Revenues 520,000 /2.20 236,364 average rate COGS 225,000 /2.30 97,826 historical rate for COGS SG&A 100,000 /2.20 45,455 average rate Depreciation 80,000 /2.10 38,095 historical rate for depreciation Income Taxes 46,000 /2.20 20,909 average rate Net Income Before Translation Gain/Loss 69,000 34,079

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