When Preparing a Foreign Affiliate's Financial Statements for Consolidation, the First

question 58

Multiple Choice

When preparing a foreign affiliate's financial statements for consolidation, the first step is to:

• A)​review the regulations of the country in which the affiliate is located to determine if consolidation is legal.
• B)​adjust the financial statements to conform to generally accepted accounting principles.
• C)​determine the affiliate's functional currency.
• D)​translate the financial statements into the parent's currency.

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Definitions:

Financial Statements

Reports that provide an overview of a company's financial condition, including the balance sheet, income statement, and cash flow statement, at a particular point in time.

Common Dividends

Payments made to shareholders of a company's common stock, representing a portion of the company’s earnings distributed to its owners.

Net Income

The total profit of a company after all expenses and taxes have been deducted from revenue.

EVA

Economic Value Added, a measure of a company's financial performance based on the residue wealth calculated by deducting its cost of capital from its operating profit.