Translate Foreign Financial Statements Practice Test

A U.S. for-profit company has a foreign branch in Argentina whose functional currency is the U.S. dollar due to significant U.S.-dollar-denominated pricing and financing; the branch’s books are maintained in Argentine pesos (ARS) under local GAAP. The branch reports ARS-denominated cash, accounts receivable, accounts payable, and equipment carried at historical cost. Under U.S. GAAP (ASC 830), how should the entity account for exchange rate differences according to U.S. GAAP when converting the branch’s ARS trial balance into U.S. dollars?

A U.S. for-profit parent consolidates a foreign subsidiary in Japan that prepares financial statements in Japanese yen (JPY) under IFRS; the subsidiary’s functional currency is the JPY. The subsidiary has a JPY-denominated long-term intercompany loan payable to the U.S. parent that is not expected to be settled in the foreseeable future and is considered part of the parent’s net investment in the subsidiary. Under U.S. GAAP (ASC 830), what is the impact of translating foreign financial statements on consolidated financial results for exchange differences related to this intercompany loan?