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FAR Additional Practice > Currency Translation > Flashcards

Flashcards in Currency Translation Deck (11)
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1
Q

Functional currency is defined as

A

The currency of the primary economic environment in which the entity operates or the currency in which most of the subsidiaries transactions are denominated

2
Q

When the exchange rate increases

A

There is debtor loss

3
Q

When the exchange rate decreases there is

A

Debtor gain

4
Q

What exchange rate is to be used to translate a foreign operations capital accounts

A

Historical

5
Q

Under IFRS what events are used to measure the rate of exchange

A

Date of Transaction (Delivery), Balance sheet date and settlement

6
Q

When selling merchandise what rate should be used to calculate the Receivable

A

Spot rate at date of transaction

7
Q

Foreign currency translation adjustment can be computed as

A

Net Assets - Adjusted Net Assets

8
Q

In remeasurement what rate are inventories carried at cost measured at

A

Historical exchange rate (most items use the current exchange rate)

9
Q

What exchange rate is used for revenues and expenses (generally)

A

Weighted average exchange rate

10
Q

How is gain or loss on a forward contract computed

A

Multiplying Foreign Currency amount by the difference between the spot rate at the bs date and the spot rate at the inception of the contract

11
Q

Where do remeasurement gains and losses and tranlslation gains losses close too, respectively

A

Remeasurement gains - continuing operations of income statement
Translation adjustments - OCI