Certain Balance Sheet Accounts of a Foreign Subsidiary of Parker

question 64

Multiple Choice

Certain balance sheet accounts of a foreign subsidiary of Parker Company at December 31, 2013, have been restated into U.S. dollars as follows: If the current rate used to restate these amounts is $.95, what was the average historical rate used to arrive at the total amount for historical rates?

• A) $0.9000.
• B) $1.0000.
• C) $0.9500.
• D) $0.9474.
• E) $1.0556.

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Definitions:

Goodwill Method

An accounting method used to evaluate the excess of purchase price over the fair value of net identifiable assets acquired in a business combination.

Journal Entries

Recorded transactions in the accounting records of a business that are used to transfer amounts from one account to another, ensuring the ledger remains in balance.

Fair Value

Fair value is an estimate of the market value of an asset, based on its current price in a fair and open market transaction.

Bonus Method

A method in accounting for partnerships where a new partner's investment is recorded at an amount that is different from the stated value of the partnership's net assets, affecting the capital accounts of the existing partners.