Profit on exchange differences, arising on transaction of foreign operations are classified as: a. Operating income b. Other comprehensive income c. Investment income d. Interest income
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- Exchange 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 lossForex difference arising from translating foreign currency denominated transactions to functional currency shall be recognized in Group of answer choices Other comprehensive income with classification adjustment Other comprehensive income without reclassification adjustment Retained earnings Profit and lossIn accordance with U.S. generally accepted accounting principles, which translation combination is appropriate for a foreign operation whose functional currency is the U.S. dollar? Choose the correct option. Method Treatmemt of transition adjustment a. Current rate other comprehensive income b. Current rate Gain or loss in net income c. Temporal other comprehensive income d. Temporal Gain or loss in net income
- According to PAS 21, exchange differences arising from the translation of monetary items arising from foreign currency transactions are recognized in * A. Directly in equity B. Any of these C. Other comprehensive income D. Profit or lossExchange differences in translating financial statements are recognized in profit or loss, while monetary and non-monetary exchange differences are reflected in OCI. TRUE OR FALSEFunctional currency is the currency that influences sales price, labour, material and other costs of a company’s goods and services. (a) Explain factors that should also be considered to determine the functional currency of a foreign operation. (b) Explain what will happen if a business transaction is denominated in foreign currency but reported in functional currency.
- which shall be recognized for each item when foreign currency gain or loss that arises from translation of foreign currency denominated transaction to functional currency? a. inventiry b. interest expense c. accounts receivable d. unearned revenueTRUE OR FALSE?In computing for the comprehensive income, the translation loss on foreign operation will be deducted from the net income.IAS 21 provides that exchange differences/(gain/loss) arising on the settlement or remeasuring foreign currency transaction shall be recognized in Share premium Profit or loss Other comprehensive income Retained earnings
- Assuming that the functional currency of a foreign subsidiary is the local currency, which of the following accounts would be translated at the current rate on the Balance Sheet date (B/S Rate)? a.Additional Paid-In Capital b.Cost of Goods Sold c.Retained Earnings d.Allowance for Doubtful AccountsWhich translation method results in a set of financial statements as if the foreign subsidiary’s transactions were carried out in US dollars? Current rate method Temporal methodQuestion: When accounting for foreign exchange transactions, which of the following statements accurately describes the use of the "Temporal Method" under the International Financial Reporting Standards (IFRS)? A) The Temporal Method is used to account for foreign exchange gains and losses on monetary assets and liabilities at the historical exchange rate. B) The Temporal Method is used to account for foreign exchange gains and losses on monetary assets and liabilities at the current exchange rate. C) The Temporal Method is used to account for foreign exchange gains and losses on non-monetary assets and liabilities at the historical exchange rate. D) The Temporal Method is used to account for foreign exchange gains and losses on non-monetary assets and liabilities at the current exchange rate.