Advanced Accounting
14th Edition
ISBN: 9781260247824
Author: Joe Ben Hoyle, Thomas F. Schaefer, Timothy S. Doupnik
Publisher: RENT MCG
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Question
Chapter 9, Problem 2P
To determine
The accounting approach used in the United States for foreign currency transaction.
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What concept underlies the two-transaction perspective in accounting for foreign currency transactions?
a. treats imports and exports as two separate transactions.
b. Foreign Exchange Gains and Losses.
c. The Effects of Changes in the world Economy.
d. Treats the export sale and the subsequent collection of cash as two separate transactions.
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
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
Chapter 9 Solutions
Advanced Accounting
Ch. 9 - Prob. 1QCh. 9 - Prob. 2QCh. 9 - What factors create a foreign exchange gain on a...Ch. 9 - In what way is the accounting for a foreign...Ch. 9 - Prob. 5QCh. 9 - How does a foreign currency option differ from a...Ch. 9 - Prob. 7QCh. 9 - Why would a company prefer a foreign currency...Ch. 9 - How do companies report foreign currency...Ch. 9 - How does a company determine the fair value of a...
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Similar questions
- 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.arrow_forwardWhich of the following items will result to foreign currency transaction gain/loss due to settlement or remeasurement? Foreign currency denominated non-monetary liabilities such as unearned revenue, warranty liability, premium liability and deferred tax liability. Foreign currency denominated non-monetary assets such as inventory, PPE, intangible asset or prepaid asset. Foreign currency denominated monetary items such as accounts payable, accounts receivable, notes payable, loans receivable or interest payable. Foreign currency denominated income statement accounts such as revenue, income, expense or loss.arrow_forwarddescribe foreign currency transaction exposure, including accounting for and disclosuresabout foreign currency transaction gains and lossesarrow_forward
- 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.arrow_forwardwhat are implications for analysis of financial statements that result from the accounting for foreign currency translation?arrow_forward14. Which of the following combinations correctly describes the relationship between foreign currency transactions, exchange rate changes, and foreign exchange gains and losses? Type of Transaction Foreign Currency Foreign Exchange Gain /Loss A. Export sale Appreciates Loss B. Import purchase Appreciates Gain C. Import purchase Depreciates Gain D. Export sale Depreciates Gaiarrow_forward
- 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 lossarrow_forwardDiscuss the accounting treatment for foreign currency transactions. How do changes in exchange rates affect a company's financial statements?arrow_forwardDiscussarrow_forward
- 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.arrow_forwardcharacterize foreign currency transaction risk, including accounting for and disclosing profits and losses on foreign currency transactions.arrow_forwardForeign exchange risk arises when: A)business transactions are denominated in foreign currencies. B)sales are made to customers in a foreign country. C)goods or services are purchased from suppliers in a foreign country. D)accounting reports are prepared in a foreign currency.arrow_forward
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