In translating a foreign subsidiary's financial statements, which exchange rates does the current rate method require for the subsidiary's assets and liabilities? The average exchange rate for the period. O The exchange rate when assets was acquired or liabilities was incurred. The spot exchange rate as of the date of the balance sheet. O The estimated exchange rate when accounts were settled in the future.

In translating a foreign subsidiary's financial statements, which exchange rates does the current rate method require for the subsidiary's assets and liabilities? The average exchange rate for the period. O The exchange rate when assets was acquired or liabilities was incurred. The spot exchange rate as of the date of the balance sheet. O The estimated exchange rate when accounts were settled in the future.

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter8: Investing Activities

Section: Chapter Questions

Problem 14QE

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In the translated financial statements, which method of translation maintains the underlying valuation methods used in preparing the foreign currency financial statements?a. Current rate method; income statement translated at average exchange rate for the year.b. Current rate method; income statement translated at exchange rate at the balance sheet date.c. Temporal method.d. Monetary/nonmonetary method.
Question: 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.
In the translated financial statements, which method of translation maintains the underlying valuation methods used in preparing the foreign currency financial statements? Choose the correct.a. Current rate method; income statement translated at average exchange rate for the year.b. Current rate method; income statement translated at exchange rate at the balance sheet date.c. Temporal method.d. Monetary/nonmonetary method.
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.
Question 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?
The exchange loss/gain due to a transaction exposure is estimated while O a. Converting a foreign currency into a domestic currency O b. Quoting a price for a foreign currency transaction O c. Entering into a transaction in foreign exchange O d. Verifying the fluctuation in the exchange rate
In 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.
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 revenue
describe foreign currency transaction exposure, including accounting for and disclosuresabout foreign currency transaction gains and losses
What is the initial measurement of foreign currency transaction? Closing rate for both monetary items and nonmonetary items. Historical rate for monetary items and closing rate for nonmonetary items Historical rate for both monetary item and nonmonetary items. Historical rate for nonmonetary items and closing rate for monetary items.