When Translating the Financial Statements of a Foreign Operation to Presentation

question 10

Multiple Choice

When translating the financial statements of a foreign operation to presentation currency,IAS 21 requires any gain or loss on translation of the financial statements to be:

• A)recognised as a revenue or expense in the statement of comprehensive income.
• B)transferred to a reserve in the equity section of the statement of financial position.
• C)deferred and amortised over a period not greater than 20 years.
• D)written off against the non-monetary assets of the foreign operation with any balance remaining recognised as a revenue or expense in the period.

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Definitions:

Selling Division

The division or part of an organization responsible for selling the company's products or services to customers.

Transfer Price

The price charged for goods, services, or intellectual property when these are exchanged between divisions within the same company.

Division Using

Refers to the allocation or utilization of resources or responsibilities among different departments or sectors within an organization.

Intermediate Product

A product that is used as an input in the production of another good rather than being sold directly to consumers.