In the Process of Consolidating the Translated Financial Accounts of a Foreign

question 29

Multiple Choice

In the process of consolidating the translated financial accounts of a foreign operation,the calculation of minority interests will be affected by the translation process in what way?

• A) The minority interests will be allocated a portion of the gain or loss on translation from the income statement.
• B) The effect of transactions between the subsidiary and the minority interests will be eliminated after calculating the unrealised foreign exchange gain or loss implicit in the unrealised profit on the inter-company transaction.
• C) The minority interests will be allocated a portion of the foreign currency translation reserve.
• D) The minority interests calculation is not affected.
• E) None of the given answers.

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Definitions:

Conversion Activity

The process of converting raw materials into finished goods through labor and manufacturing operations.

Equivalent Units

A concept used in process costing that converts partially completed units into a smaller number of fully completed units to simplify cost calculations.

FIFO Method

An accounting method where the first items added to inventory are the first ones to be sold or used.

Equivalent Units

A concept used in cost accounting to express the amount of work done by manufacturers in terms of fully completed units of output.