CH 5. - Foreign Operations Flashcards
1
Q
Functional Currency
A
Entity using the exchange rate in effect on the date of the transaction.
2
Q
Spot Rate
A
Exchange Rate that is effective on a particular date.
3
Q
Forward Exchange Contracts
A
An agreement to exchange currencies of 2 Different Countries at a Specified Rate (Forward Rate) on a Stipulated Future Date.
Entity Enters into a transaction like a “Hedge” to protect them from exposure that is denominated in a foreign currency.
4
Q
Forward Rate
A
Exchange Rate is expected to be at some point in the future.
5
Q
What are the types of Currencies?
A
Transactional = Local Currency Functional = Greatest Economic Impact Reporting = Used to Prepare F/S
