Which of the Following Statements Regarding the Preparation of Foreign

question 7

Multiple Choice

Which of the following statements regarding the preparation of foreign currency adjustments, for consolidation or the application of the equity method, is FALSE?

• A)Consolidation adjustments must be restated to the presentation currency.
• B)Intercompany transactions are eliminated at the rate when the transaction occurred.
• C)Monetary balances are eliminated using the spot rate.
• D)Fair value adjustments must be reflected on the balances sheet at the closing rate for the year.

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Definitions:

Cost of Goods Sold

Expenses directly incurred from producing goods a company sells, such as costs for materials and labor.

Direct Materials

Raw materials that can be directly identified and easily traced to the manufacturing of a product.

Indirect Material

Materials used in the support of the production process but not directly a part of the finished product.

Period Cost

Costs that are expensed in the period in which they are incurred, not directly tied to the production of goods or services.