1. Which of the following statements is incorrect? * A. A foreign operation (e.g., a branch) that is essentially an extension of the entity (e.g., the home office) would have the same functional currency as that of the entity. B. An entity can only have one functional currency but it can have as many presentation currencies as it wishes. C. Subsequent to initial recognition, both monetary and non-monetary items arising from a foreign currency transaction are translated at the closing rate. D. A foreign currency transaction is initially recognized at the spot exchange rate at the date of the transaction.
1. Which of the following statements is incorrect? * A. A foreign operation (e.g., a branch) that is essentially an extension of the entity (e.g., the home office) would have the same functional currency as that of the entity. B. An entity can only have one functional currency but it can have as many presentation currencies as it wishes. C. Subsequent to initial recognition, both monetary and non-monetary items arising from a foreign currency transaction are translated at the closing rate. D. A foreign currency transaction is initially recognized at the spot exchange rate at the date of the transaction.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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1. Which of the following statements is incorrect? *
A. A foreign operation (e.g., a branch) that is essentially an extension of the entity (e.g., the home office) would have the same functional currency as that of the entity.
B. An entity can only have one functional currency but it can have as many presentation currencies as it wishes.
C. Subsequent to initial recognition, both monetary and non-monetary items arising from a foreign currency transaction are translated at the closing rate.
D. A foreign currency transaction is initially recognized at the spot exchange rate at the date of the transaction.
2. 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
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