What is ABC Philippines Co.’s functional currency?A. none of the choices given B. Philippine peso C. Either Philippine Peso or U.S dollar D.U.S. dollar You are an auditor. ABC Philippines Co., your client, is not sure on whatto disclose in its financial statements as its functional currency. Relevantinformation follows:ABC Philippines Co. is a branch of ABC U.S. Co. ABC Philippines operates ina Philippine Economic Zone Authority (PEZA) Special Economic Zone.Philippines is engaged in the apparel business. All of its raw materialsare imported from the main office in the U.S. and all of its finishedproducts are exported directly to U.s. customers. The U.S. customers remitpayments to the U.S. main office. The U.S. main office will then providethe Philippine branch its working capital needs. None of ABC PhilippinesSes finished products are sold in the Philippines. Theimported and finished goods exported are denominated in U.S. dollars.ABCraw materials

Functional currency is the currency in which the operates. It is the currency of the primary…

You are an auditor. ABC Philippines Co., your client, is not sure on what to disclose in its financial statements as its functional currency. Relevant information follows: ABC Philippines Co. is a branch of ABC U.S. Co. ABC Philippines operates in a Philippine Economic Zone Authority (PEZA) Special Economic Zone. ABC Philippines is engaged in the apparel business. All of its raw materials are imported from the main office in the U.S. and all of its finished products are exported directly to U.s. customers. The U.S. customers remit payments to the U.S. main office. The U.S. main office will then provide the Philippine branch its working capital needs. None of ABC Philippines Sos' finished products are sold in the Philippines. The raw materials imported and finished goods exported are denominated in U.S. dollars.

You are an auditor. ABC Philippines Co., your client, is not sure on what to disclose in its financial statements as its functional currency. Relevant information follows: ABC Philippines Co. is a branch of ABC U.S. Co. ABC Philippines operates in a Philippine Economic Zone Authority (PEZA) Special Economic Zone. ABC Philippines is engaged in the apparel business. All of its raw materials are imported from the main office in the U.S. and all of its finished products are exported directly to U.s. customers. The U.S. customers remit payments to the U.S. main office. The U.S. main office will then provide the Philippine branch its working capital needs. None of ABC Philippines Sos' finished products are sold in the Philippines. The raw materials imported and finished goods exported are denominated in U.S. dollars.

Contemporary Auditing

11th Edition

ISBN:9781337650380

Author:KNAPP

Publisher:KNAPP

Chapter8: International Cases

Section8.1: Longtop Financial Technologies Limited

Problem 3Q

See similar textbooks

Similar questions

Siemens AG, a German company, is Europe’s largest engineering and electronics company. The company prepares its financial statements according to IFRS. Required: 1. Use the Internet to locate the most recent financial report for Siemens. The address is www.siemens.com. Locate the significant accounting policies disclosure note. 2. How does the company account for research and development expenditures? Does this policy differ from U.S. GAAP?
Siemens AG, a German company, is Europe’s largest engineering and electronics company. The company prepares its financial statements according to IFRS. Required: I need to use the Internet to locate the most recent financial report for Siemens. The address is www.siemens.com. Locate the significant accounting policies disclosure note. How does the company account for research and development expenditures? Does this policy differ from U.S. GAAP?
Belmonte Corporation, with a division located in Germany, must translate its financial statements from euros to U.S. dollars. What is the major accounting issue involved in translation? O Most accountants are not conversant in foreign currency exchange. O U.S. GAAP may differ from German GAAP. The U.S. dollar has been steadily falling relative to the euro. O The resulting balance sheet may not balance.
Choose the correct. Which of the following statements is not true under U.S. GAAP?a. Operating segments can be determined by looking at a company’s organization chart.b. Companies must combine individual foreign countries into geographic areas to comply with the geographic area disclosure requirements. c. Companies that define their operating segments by product lines must provide revenue and asset information for the domestic country, for all foreign countries in total, and for each material foreign country.d. Companies must disclose total assets, investment in equity method affiliates, and total expenditures for long-lived assets by operating segment.
Goldworld Mining Inc. (GMI) is a new, privately owned gold mining company that willprepare its financial statements using ASPE. GMI’s head office was set up in theNorthwest Territories, but it also began mining operations in the United States andSouth America. There are only two individuals in GMI’s accounting department: acontroller and an accounting clerk. GMI’s chief financial officer has some doubts aboutthe controller’s understanding of complex accounting issues given some errors thatwere identified in the last few months.GMI has a loan outstanding from RD Bank that has two loan covenants: GMI’sdebt-to-equity ratio CANNOT exceed 1.5:1, and GMI must maintain a current ratio of atleast 2:1.GMI requires additional capital to finance its operations and is planning on going publicin the near future. GMI’s controller is preparing GMI’s first set of annual financialstatements for the current year ended December 31.Required:Evaluate the two accounting options available for GMI to report…
Autocar is a public listed company currently based in Japan. The company is engaged in the automobile industry. Autocar is currently using local Accounting Standards for its financial reporting. The company has plan to involve in extensive trading activities with many international companies and to acquire at least one foreign partner as a subsidiary in the near future for the expansion of its trading activities. Autocar board of directors is considering the adoption of International Financial Reporting Standards (IFRS). Discuss the implications of adopting IFRS by Autocar for its financial reporting purposes.
One of the ways to analyze a company’s financial performance is to compare its performance with those of Multiple Choice foreign governments. manufacturers producing their products. its competitors. the U.S. government.
ABC Philippines Co. is required to file audited financial statements with the Philippine Securities and Exchange Commission (SEC) and the Bureau of Internal Revenue (BIR). What is the presentation currency for the financial statements to be filed with the said government agencies? Either Philippine Peso or U.S dollar U.S. dollar none of the choices given Philippine peso
Sendelbach Corporation is a U.S.-based organization with operations throughout the world. One of its subsidiaries is headquartered in Toronto, Canada. Although this wholly-owned subsidiary operates primarily in Canada, it engages in some transactions through a branch in Mexico. Therefore, the subsidiary maintains a ledger denominated in Mexican pesos (Ps) and a general ledger in Canadian dollars (C$). As of December 31, 2024, the subsidiary is preparing financial statements in anticipation of consolidation with the U.S. parent corporation. Both ledgers for the subsidiary are as follows: Accounts payable Accumulated depreciation Buildings and equipment Cash Common stock Cost of goods sold Depreciation expense Dividends, 4/1/24 Gain on sale of equipment, 6/1/24 Inventory Notes payable-due in 2027 Receivables Retained earnings, 1/1/24 Salary expense Sales Utility expense Branch operation Totals Accounts payable Accumulated depreciation Building and equipment Cash Salary expense Sales Main…
Businesspeople need to understand international culture and corporate practices to successfully transfer their business activities to foreign countries. Compare and contrast US culture and corporate practices with India’s and identify challenges as a result for a US based company to operate its activities in India. Identify at least three risks associated with doing transactions by the US based company operating in India and what can be done to mitigate such risks. Note that operations are in India but majority of the products are sold in US. Include tangible examples for better clarity. Include currency exchange risk among those mentioned above, and explain ways to mitigate this risk. Explain in detail.
Choose the correct. Under current U.S. accounting guidelines, which of the following items of information is a company not required to disclose, even if it were material in amount?a. Revenues generated from sales of its consumer products line of goods.b. Revenues generated by its Japanese subsidiary.c. Revenues generated from export sales.d. Revenues generated from sales to Walmart.
Statoil, the national company in Norway, is a large, sophisticated, and active participant in both the currency and petrochemical markets. Although it is a Norwegian company, because it operates within the global oil market, it considers the U.S. dollar ($), rather than the Norwegian krone (Nok), as its functional currency. Ari Karlsen is a currency trading strategist for Statoil. In a daily meeting, the Chief Financial Officer (CFO) gave Ari the following table of market rates: Spot exchange rate: Yen 106/$U.S. dollar interest rate: per annum 10%Japanese Yen interest rate: per annum 6% and told Ari that the company’s financial analyst expected the Japanese Yen to depreciate against the U.S. dollar by 3.46% in 90 days. Assume there are 360 days in a year, and all interest rates are simple interest rates. If the financial analyst’s prediction about the US dollar and Japanese Yen turned out to be true: What would the spot exchange rate (Yen/$) be in 90 days?