Question 1

The financial statement of an entity operating in a hyperinflationary economy requires use of IAS 21 only.

Accepted Answer

A) True 
 B)False  False

Question 2

What is the difference between currency conversion and currency translation?

Accepted Answer

A) Currency translation takes place during the year,currency translation takes place in transactions completed by the year end. 
B) Currency conversion takes place in transactions not completed before year end; Currency Translation takes place in transactions completed by year end 
C) Currency conversion takes place in transactions completed before year end; Currency Translation takes place in transactions not completed by year end 
D) Currency conversion takes place in transactions not completed by the year end,currency translation takes place during the year 
A) Currency translation takes place during the year,currency translation takes place in transactions completed by the year end. 
B) Currency conversion takes place in transactions not completed before year end; Currency Translation takes place in transactions completed by year end 
C) Currency conversion takes place in transactions completed before year end; Currency Translation takes place in transactions not completed by year end 
D) Currency conversion takes place in transactions not completed by the year end,currency translation takes place during the year C

Question 3

Entity X is an Italian subsidiary of a Japanese company which trades exclusively with American companies.Which is their presentation currency?

Accepted Answer

A) Yen 
B) Euro 
C) Sterling 
D) Dollar 
A) Yen 
B) Euro 
C) Sterling 
D) Dollar A

Question 4

An entity can hedge the exposure position of a foreign investment by raising loans in a foreign country denominated in the functional currency of the foreign operation

Accepted Answer

A) True 
 B)False

Question 5

IAS 21 Requires translation of assets and liabilities at closing rate

Accepted Answer

A) True 
 B)False

Question 6

Which of these is NOT a requirement for an entity reporting in a currency of a hyperinflationary economy?

Accepted Answer

A) The financial statements should be stated in terms of a measuring unit current at the date of current statement of financial position date 
B) Past corresponding financial statements should be stated in terms of a measuring unit which was current at the date of current statement of financial position date 
C) Gain or loss on the net monetary position should be included in profit or loss and separately disclosed 
D) The accounts should be completed in both the functional & presentation currencies. 
A) The financial statements should be stated in terms of a measuring unit current at the date of current statement of financial position date 
B) Past corresponding financial statements should be stated in terms of a measuring unit which was current at the date of current statement of financial position date 
C) Gain or loss on the net monetary position should be included in profit or loss and separately disclosed 
D) The accounts should be completed in both the functional & presentation currencies.

Question 7

Which of these is NOT matched to the correct rate when using the temporal method?

Accepted Answer

A) Cost and depreciation of property,plant,equipment and intangible assets- date of acquisition 
B) Exchange differences- closing rate 
C) income and expense items- profit and loss 
D) monetary items- closing rate 
A) Cost and depreciation of property,plant,equipment and intangible assets- date of acquisition 
B) Exchange differences- closing rate 
C) income and expense items- profit and loss 
D) monetary items- closing rate

Question 8

IAS 21 treats functional currency monetary and non-monetary items in the same way.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is NOT a form of hedging?

Accepted Answer

A) bonds 
B) swaps 
C) options 
D) forwards 
A) bonds 
B) swaps 
C) options 
D) forwards

Question 10

The presentation currency is the currency that the subsidiaries use to present their results to head office

Accepted Answer

A) True 
 B)False

Exam 30: Foreign Currency Translation

The financial statement of an entity operating in a hyperinflationary economy requires use of IAS 21 only.

What is the difference between currency conversion and currency translation?

Entity X is an Italian subsidiary of a Japanese company which trades exclusively with American companies.Which is their presentation currency?

An entity can hedge the exposure position of a foreign investment by raising loans in a foreign country denominated in the functional currency of the foreign operation

IAS 21 Requires translation of assets and liabilities at closing rate

Which of these is NOT a requirement for an entity reporting in a currency of a hyperinflationary economy?

Which of these is NOT matched to the correct rate when using the temporal method?

IAS 21 treats functional currency monetary and non-monetary items in the same way.

Which of the following is NOT a form of hedging?

The presentation currency is the currency that the subsidiaries use to present their results to head office

Basics of Financial Reporting

International Accounting Differences

The Process of Harmonization

Economic Valuation Concepts

Current Entry Value

Current Exit Value and Mixed Values

Current Purchasing Power Accounting

Fair Values

Accounting Theory and Conceptual Frameworks

Structure of Published Financial Statements

Corporate Governance, corporate Social Responsibility and Ethics

Basics of Interpretation of Financial Statements

Fixed Non-Currenttangible Assets

Intangible Assets

Impairment and Disposal of Assets

Leases

Inventories and Construction Contracts

Accounting for Financial Instruments

Revenue

Provisions, contingent Liabilities and Contingent Assets

Income Taxes

Employee Benefits

Changing Prices and Hyperinflationary Economies

Statements of Cash Flows

Disclosure Issues

Business Combinations

Consolidated Financial Statements

Alternative Concepts on Consolidation and Business Combinations

Accounting for Associates, joint Arrangements and Related Party Disclosures

Interpretation of Financial Statements

Techniques of Financial Analysis

Filters