When Translating the Financial Statements of a Foreign Operation to Presentation

question 6

Multiple Choice

When translating the financial statements of a foreign operation to presentation currency,AASB 121 requires any gain or loss on translation of the accounts 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:

American Call

An option contract that gives the holder the right to buy a specific asset at a set price anytime before the expiration date.

Expiration Date

The predefined date after which an option or other financial contract becomes invalid and the right to exercise it ceases.

Conversion Premium

The additional amount above the par value that an investor pays to convert a convertible security (like a bond) into a predetermined number of shares of common stock.

Issuance

Issuance refers to the process of offering new or existing securities for sale to investors, typically as a means to raise capital for the issuer.