- CFA Exams
- CFA Level I Exam
- Topic 3. Financial Statement Analysis
- Learning Module 12. Multinational Operations
- Subject 4. Translation: The All-Current Method
CFA Practice Question
The German subsidiary of the U.S. firm Max. Co. has the following balance sheet information for its first year of operation (German Marks):
Inventory: 450.
Fixed assets (net): 780.
Total: 1,330.
Accounts payable: 120.
Common stock: 1,000.
Retained earnings: 90.
Total: 1,330.
B. $128.57.
C. $150.00.
Cash: 100.
Inventory: 450.
Fixed assets (net): 780.
Total: 1,330.
Accounts payable: 120.
Common stock: 1,000.
Retained earnings: 90.
Total: 1,330.
The U.S. controller will use the all-current method for foreign currency translation, where the translation rate at the beginning of the year was 3.0 marks to the dollar, the average rate 3.5 marks to the dollar, and the year-end rate at 4 marks to the dollar.
Using the all-current method, inventory would be translated (to the nearest penny) at:
A. $112.50.
B. $128.57.
C. $150.00.
Correct Answer: A
User Contributed Comments 3
| User | Comment |
|---|---|
| danlan2 | Use 4 marks for inventory. |
| ljamieson | how about use ending fx rate for inventory |
| Querdenker | Nice how AN predicts the breakdown of the Euro plus significant devaluation of the German Currency... |