Ota L'Abbe, a supervisor at an investment research firm, has asked one of the junior analysts, Andreas Hally, to draft a

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Ota L'Abbe, a supervisor at an investment research firm, has asked one of the junior analysts, Andreas Hally, to draft a research report dealing with various accounting issues.Excerpts from the request are as follows:"¢ "There's an exciting company that we're starting to follow these days. It's called Snowboards and Skateboards, Inc. They are a multinational company with operations and a head office based in the resort town of Whistler in western Canada. However, they also have a significant subsidiary located in the UnitedStates.""¢ "Look at the subsidiary and deal with some foreign currency issues including the specific differences between the temporal and all-current methods of translation, as well as the effect on financial ratios." "¢ "The attached file contains the September 30, 2008, financial statements of the U.S. subsidiary. Translate the financial statements into Canadian dollars in a manner consistent with U.S. GAAP."The following are statements from the research report subsequently written by Hally:Statement 1: Subsidiaries whose operations are well integrated with the parent will use the all-current method of translation.Statement 2: Self-contained, independent subsidiaries whose operating, investing, and financing activities are primarily located in the local market will use the temporal method of translation.Other information to be considered"¢ Exchange rates (CAD/USD) "¢ Beginning inventory for fiscal 2008 had been purchased evenly throughout fiscal 2007. The company uses the FIFO inventory value method. "¢ Dividends of USD 25,000 were paid to the shareholders on June 30, 2008. "¢ All of the remaining inventory at the end of fiscal 2008 was purchased evenly throughout fiscal 2008. "¢ All of the PP&E was purchased, and all of the common equity was issued at the inception of the company on October 1, 2004. No new PP&E has been acquired, and no additional common stock has been issued since then. However, they plan to purchase new PP&E starting in fiscal 2009. "¢ The beginning retained earnings balance for fiscal 2008 was CAD 1,550,000. "¢ The accounts payable on the fiscal 2008 balance sheet were all incurred on June 30, 2008. "¢ The U.S. subsidiary's operations are highly integrated with the main operations in Canada. "¢ The remeasured inventory for 2008 using the temporal method is CAD 810,000. "¢ All monetary asset and liability balances are the same as they were at the end of the 2007 fiscal year, except that long-term debt was USD 467,700. "¢ Costs of goods sold under the temporal method in 2008 is CAD 1,667,250.As compared to the temporal method, the parent's fixed asset turnover for fiscal 2008 using the all-current method is:

Ota L Abbe A Su 1 (140.17 KiB) Viewed 78 times

Ota L Abbe A Su 2 (38.88 KiB) Viewed 78 times

A. higher.
B. lower.
C. the same.