Gains and losses on financial instruments used to hedge a foreign operation's net investment are disclosed in the consolidated financial statements in the following manner
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Gains and losses on financial instruments used to hedge a foreign operation's net investment are disclosed in the consolidated financial statements in the following manner.
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- How are gains and losses on financial instruments used to hedge the net investment in a foreign operation reported in the consolidated financial statements?describe foreign currency transaction exposure, including accounting for and disclosuresabout foreign currency transaction gains and losses• distinguish between IFRS and US GAAP in the classifi cation, measurement, and disclosureof investments in fi nancial assets, investments in associates, joint ventures, business combinations, and special purpose and variable interest entities;
- Comprehensive income includes items not included in the computation of net income, such as foreign currency translation adjustments and unrealized gains and losses on available-for-sale securities. True FalseWhich statement is correct regarding fair value hedges and cash flow hedges of a foreign currency asset or liability. a. revaluation of a cash flow hedge is reported in the income statement b. under a cash flow hedge the difference between the revaluation gain and loss on the hedge and the revaluation gain or loss on the item being hedged is reported in Other Comprehensive Income c. under a cash flow hedge the difference between the revaluation gain or loss on the hedge and the revaluation gain or loss on the item being hedged is reported in the income statement d. a. revaluation of a fair value hedge is reported in Other Comprehensive Income e. under a fair value hedge the difference between the revaluation gain or loss on the hedge and the revaluation gain or loss on the item being hedged is reported in Other Comprehensive IncomeIn presenting foreign currency denominated transactions to the functional currency of the entity, which of the following statements is correct? a. When nonmonetary items are translated from foreign currency to functional currency in the financial statements, foreign currency gain of loss will be recognized. b. Monetary items shall be initially recognized and measured at the exchange rate prevailing at the end of the reporting period. c. Foreign currency gain or loss arising from translation of the foreign currency denominated items to functional currency shall be presented in other comprehensive income with reclassification adjustment to profit or loss if realized. d. Foreign currency denominated income statement accounts shall be translated using the exchange rate at the date of transaction.
- nee 1. If the foreign subsidiary of a US Corporation uses the currency of the region as its functional currency, which of the following methods would they use and where would gains and losses be reported? A. Remeasurement, Temporal method. Income statement. B. Translation, Current Rate method. Comprehensive income. C. Remeasurement, Temporal method. Comprehensive income. D. Translation, Current Rate method. Income statement 2. If the foreign subsidiary of a US Corp uses US currency as its functional currency, which of the following methods would they use? Where would gains and losses be presented? A. Translation, Current Rate method. Comprehensive Income B. Translation, Current Rate method. Income statement C. Remeasurement, Temporal method. Comprehensive income. D. Remeasurement, Temporal Method. Income StatementExchange difference arising from the translation of financial statements of a foreign operation into the presentation currency of the reporting entity shall be accounted for as Group of answer choices Translation gain or loss as a component of profit or loss Transaction gain or loss as component of other comprehensive income Translation gain or loss as a component of other comprehensive income Transaction gain or loss as component of profit or lossGains from remeasuring a foreign subsidiary’s financial statements from the local currency, which is NOT the functional currency, into the parent company’s currency should be reported as a(n): extraordinary item (net of tax). part of continuing operations. deferred credit. other comprehensive income item.
- How should exchange gains or losses resulting from foreign currency transactions be accounted for? Included as component of income from continuing operations for the period in which the rate changes. Included as component of other comprehensive income for the period in which the rate changes. Included in the statement of financial position as a deferred item. Included in net earnings for gains, but deferred for losses.Other comprehensive income includes all of the following, except: unrealized gains on available for sale financial asset. loss from translating the financial statements of a foreign operations. actuarial gain on defined benefit plan that is fully recognized. share premiumQuestion What causes balance sheet (or translation) exposure to foreign exchange risk? How does balance sheet exposure compare with transaction exposure? In translating a foreign subsidiary's financial statements, what exchange rate should be used for the subsidiary's revenues and expenses? How can a parent corporation determine the functional currency for a foreign subsidiary that conducts business in more than one country? What concept underlies the temporal method of translation? What concept underlies the current rate method of translation? How does balance sheet exposure differ under these two methods? What are the major procedural differences in applying the current rate and temporal methods of translation?