Reference no: EM132986506

Question 1 - Which of the following is likely to affect an analyst's ability to make meaningful comparisons of financial statement ratios for companies in different countries?

A) Accounting diversity.

B) Varying business traditions.

C) Unique terminology.

D) All of the above.

Question 2 - Use the following information to answer questions: Sub Ltd., a British subsidiary of Parent Ltd., an Australian company, showed cost of goods sold on its income statement for the year ended December 31, 20x1.

Inventory, 1/1/20x1 £ 200,000

Purchases for 20x1 1,800,000

Cost of Goods Available for Sale 2,000,000

Inventory, 31/12/20x1 400,000

Cost of Goods Sold £ 1,600,000

Exchange rates A$/£

December 31, 20x0 $0.560

December 31, 20x1 $0.522

Average for 20x1 $0.547

1. What amount should be used to consolidate Sub's cost of goods sold into Parent's income statement under the current rate method?

A) $875,200

B) $835,200

C) $896,000

D) $887,800

2. What amount should be used to consolidate Sub's cost of goods sold into Parent's income statement under the temporal method, assuming ending inventory was purchased on the last day of the year?

A) $896,000

B) $875,200

C) $865,000

D) $887,800