chapter 8

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.

Describe guidelines for determining when foreign currency financial statements are to be translated using the current rate method and when they are to be remeasured using the temporal method.

Explain the following a) Gain or losses on foreign exchange translations. b )Recording of previous periods errors in revenue and expenditure after preparation of final accounts in the current periods.

Which accounts are remeasured (versus translated) using current exchange rates? Select one: a. All current assets and liabilities b. All assets and liabilities All revenues and expenses d. Cash, receivables, and most liabilities e. All noncurrent assets and liabilities C.

In 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

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.

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.

31.  How should exchange gains or losses resulting from foreign currency transactions be accounted for?a. Included as component of income from continuing operations for the period in which the ratechanges.b. Included as component of other comprehensive income for the period in which the rate changes.c. Included in the statement of financial position as a deferred item.d. Included in net earnings for gains, but deferred for losses. 32. When the information about two entities engaged in the same industry has been prepared and presented in similarmanner, the information exhibits the enhancing qualitative characteristics ofa. Relevanceb. Consistencyc. Faithful representationd. Comparability 33. What are the attributes that make the information provided in the financial statements useful to the readers?a. Qualitative characteristics of financial informationb. Quantitative characteristics of financial informationc. Elements of financial statementsd. Objectives of financial reporting 34.…

what are implications for analysis of financial statements that result from the accounting for foreign currency translation?

When translating the financial statements of an entity from its functional currency to its selected presentation currency, which of the following translation measurement is incorrect? Assets and liabilities are translated at the closing rate at the date of Statement of Financial Position. Income and expenses are translated at (1) exchange rates at the date of the transaction or (2) average rate for the period for practicality. Share capital accounts are translated at the date of the transaction resulting to that equity items. Retained earnings are translated using the average rate during the period.

Briefly summarize the accounting issues arising from foreign currency denominated transactions

At what rates should the following balance sheet accounts in foreign statements be translated (using the current rate method) into U.S. dollars? Choose the correct. Equipment                      Accumulated                               Depreciation-Equipmenta. Current                          Current            b. Current                    Average for yearc. Historical                      Current            d. Historical                     Historical

Describe the following: 1)Recording of previous periods errors in revenue and expenditure after preparation of final accounts in the current periods. 2)Gain or losses on foreign exchange translations.

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 loss

The translation (remeasurement) adjustment reported in a translation when the functional currency is not the foreign currency is included a. as a separate component of other comprehensive income b. in the current liability section of the balance sheet as deferred revenue c. in the calculation of net income d. none of the above

When are foreign currency transaction gains or losses required to be recognized in the financial statements, how are they to be disclosed and where in the financial statements?

At what rates should the following balance sheet accounts in foreign statements be translated (using the current rate method) into U.S. dollars?

Exchange differences arising from the translation of financial statements of a foreign operation shall be accounted for as: (using the temporal method) Translation gain or loss as component of other comprehensive income Translation gain or loss as component of profit or loss As valuation adjustment on the company's retained earnings Netted to the balance of foreign exchange gain or loss

Exchange differences arising from the translation of financial statements of a foreign operation shall be accounted for as: (using the closing rate method method) Translation gain or loss as component of other comprehensive income Translation gain or loss as component of profit or loss As valuation adjustment on the company's retained earnings O Netted to the balance of foreign exchange gain or loss

(c) Explain the rule for translating the Financial Statements of Foreign Operations from Functional Currency to Presentation Currency

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 Accounts

Which 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 method