Foreign Currency Accounting

Question 1

What are transactions with a foreign entity denominated in a foreign currency?

Answer 1

Foreign currency transactions

Question 2

What is the conversion of financial statements of a foreign entity into financial statements expressed in the domestic currency?

Answer 2

Foreign currency translation

Question 3

What is the exchange rate at the current date, or for immediate delivery of currency, often referred to as the spot rate?

Answer 3

Currency exchange rate

Question 4

What is the exchange rate existing now for exchanging two currencies at a specific future date?

Answer 4

Forward exchange rate

Question 5

What is another name for forward exchange rate?

Answer 5

Bet

Question 6

What is the rate in effect at the date of issuance of stock or acquisition of assets?

Answer 6

Historical exchange rate

Question 7

What is historical exchange rate used for?

Answer 7

Equity

Question 8

What rate is calculated to take into account the exchange rate fluctuations for the period?

Answer 8

Weighted average rate

Question 9

What is the weighted average rate used for?

Answer 9

Income statement

Question 10

What is the currency of the entity ultimately reporting financial results of the foreign entity?

Answer 10

Reporting currency

Question 11

What is the currency of the of the primary economic environment in which the entity operates, usually the local currency or the reporting currency?

Answer 11

Functional currency

Question 12

What is restatement of financial statements denominated in the functional currency to the reporting currency using appropriate rates of exchange?

Answer 12

Foreign currency translation

Question 13

Is foreign currency translation functional or dysfunctional?

Answer 13

Functional

Question 14

What is the restatement of foreign financial statements from the foreign currency to the reporting currency using appropriate rates of exchange?

Answer 14

Foreign currency remeasurement

Question 15

Is foreign currency remeasurement functional or dysfunctional?

Answer 15

Dysfunctional

Question 16

What are the 2 situations for foreign currency remeasurement?

Answer 16

The reporting currency is the functional currency and the financial statements must be restated in the entity’s functional currency prior to translating currency

Question 17

What are the steps in restating foreign financial statements?

Answer 17

Prepare in accordance with GAAP/IFRS, Determine the functional currency and appropriate exchange rates, and remeasure and/or translate the financial statements

Question 18

What is the remeasurement method also known as?

Answer 18

Temporal method

Question 19

What rate is used for monetary items on the balance sheet during the remeasurement method and is it fixeed or fluctuate?

Answer 19

Current/year end rate, fixed

Question 20

What rate does non monetary items on the balance sheet use during the remeasurement method and is it fixed or fluctuate?

Answer 20

Historical rate, fluctuate

Question 21

What rate does non balance sheet related items on the income statement use during the remeasurement method?

Answer 21

Weighted average rate

Question 22

What is the translation method also known as?

Answer 22

Current rate method

Question 23

What are all income statement items rate during translation method?

Answer 23

Weighted average rate

Question 24

Does remeasurement or translation amounts go in other comprehensive income?

Answer 24

Translation

Question 25

What rate is used for all assets and liabilities in the translation method?

Answer 25

Current exchange rate