Exam 24: Accounting for Foreign Currency Transactions
Exam 1: An Overview of the International External Reporting Environment58 Questions
Exam 2: The Conceptual Framework of Accounting and Its Relevance to Financial Reporting69 Questions
Exam 3: Theories of Financial Accounting76 Questions
Exam 4: An Overview of Accounting for Assets75 Questions
Exam 5: Depreciation of Property, Plant and Equipment63 Questions
Exam 6: Revaluations and Impairment Testing of Non-Current Assets52 Questions
Exam 7: Inventory63 Questions
Exam 8: Accounting for Intangibles55 Questions
Exam 9: An Overview of Accounting for Liabilities58 Questions
Exam 10: Accounting for Leases64 Questions
Exam 12: Accounting for Financial Instruments70 Questions
Exam 13: Revenue Recognition Issues61 Questions
Exam 14: The Statement of Comprehensive Income and Statement of Changes in Equity65 Questions
Exam 15: Accounting for Income Taxes97 Questions
Exam 16: The Statement of Cash Flows69 Questions
Exam 17: Events Occurring After the Reporting Date66 Questions
Exam 18: Related-Party Disclosures63 Questions
Exam 21: Further Consolidation Issues I: Accounting for Intragroup Transactions46 Questions
Exam 22: Further Consolidation Issues II: Accounting for Non-Controlling Interests30 Questions
Exam 23: Further Consolidation Issues III: Accounting for Indirect Ownership Interest46 Questions
Exam 24: Accounting for Foreign Currency Transactions55 Questions
Exam 25: Translating the Financial Statements of Foreign Operations33 Questions
Exam 26: Accounting for Corporate Social Responsibility52 Questions
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What is a qualifying asset,and what are the accounting implications in respect to accounting for foreign exchange differences when acquiring such an asset?
(Essay)
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On 1 July 2013 Kanga Consultants Plc,a Dutch company,completes a contract to provide advice on the installation of a networked computer system to a company in the US.The client pays the fee of US$500 000 into Kanga Consultants' US bank account on that date.The bank pays interest of 8 per cent annually on 30 June.The exchange rate information is:
1 July 2013 €1 = US$0.56
30 June 2014 €1 = US$0.62
What journal entries are required in Kanga Consultants Plc's books for 1 July 2013 and 30 June 2014 in accordance with IAS 21 (rounded to the nearest whole euro)?
(Multiple Choice)
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Where the hedge arrangement completely eliminates the consequences of adverse exchange-rate fluctuations,the purchase or sales arrangement is considered to be:
(Multiple Choice)
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Describe,with examples,the reasons why organisations would want to swap a loan denominated in one currency for another.
(Essay)
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Explain why some opponents of the accounting prescribed in IAS 21 object to the requirement that long-term receivables and payables be translated using the reporting date spot rates.
(Essay)
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The following items are in the financial statements of Pirie Plc as at 30 June 2015. I Foreign currency accounts receivable II Foreign currency long-term debt III Machinery measured in foreign currency-at cost IV Inventories measured in foreign currency Which of the following combinations identify all items required to be translated at spot rate on 30 June 2015 as prescribed in IAS 21 The Effects of Changes in Foreign Exchange Rates?
(Multiple Choice)
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Hedges cannot be designated and/or documented on a retrospective basis.
(True/False)
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In selecting the appropriate foreign currency exchange rates to apply in translating foreign currency transactions,the accountant exercises an important element of judgment about whether the rates are overvaluing or undervaluing the reporting currency.
(True/False)
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An example of a foreign currency swap is when a loan denominated in one currency is swapped for a loan denominated in another currency.
(True/False)
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Apart from some limited exceptions,IAS 21 requires that exchange differences on monetary items shall be:
(Multiple Choice)
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For a cash flow hedge relating to the purchase of a particular asset,foreign exchange gains and losses made on the hedging instrument:
(Multiple Choice)
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Explain the terms hedging instrument and hedged item,and how hedge accounting brings these two together.
(Essay)
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Which of the following statements is correct with respect to IAS 21 The Effects of Changes in Foreign Exchange Rates?
(Multiple Choice)
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Which of the following items is within the scope of IAS 21 The Effects of Changes in Foreign Exchange Rates?
(Multiple Choice)
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An exception to the requirement that foreign currency monetary items should be re-translated at the reporting date is:
(Multiple Choice)
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Which of the following items is not within the scope of IAS 21 The Effects of Changes in Foreign Exchange Rates?
(Multiple Choice)
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On 1 July 2015 Jarrets Plc borrows £500 000 from a British bank at an interest rate of 8 per cent,repayable in pounds sterling (£)and with interest due on 30 June each year.The term of the loan is 3 years.On the same date Fitners Plc borrows €1 million from a European bank at an interest rate of 10 per cent.The term of the loan is 3 years.Jarrets and Fitners decide to swap their interest and principal obligations on 1 July 2015.Exchange rate information is as follows:
1 July 2015 €1.00 = £0.50
30 June 2016 €1.00 = £0.55
Both Jarrets and Fitners are Dutch companies.What are the journal entries to record the swap for the period ended 30 June 2016 in Fitners Plc's books (rounded to the nearest whole euro)?
(Multiple Choice)
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In terms of retrospectively assessing hedge effectiveness,which of the following situations does not meet the criteria for effectiveness?
(Multiple Choice)
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The effect of an increase in the exchange rate for British pounds relative to other major world currencies would include:
(Multiple Choice)
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