Under the Translation Method Required by AASB 121,the Approach to Translating

question 10

Multiple Choice

Under the translation method required by AASB 121,the approach to translating a foreign operation's accounts includes:

• A) translating monetary items at the closing rate of exchange .
• B) translating non-monetary assets at the average exchange rate since the date of purchase of the asset.
• C) translating transfers of post-acquisition equity items within the equity category at the rate of exchange current at the date the original equity item was first included in equity.
• D) translating revenues and expenses at the average rate of exchange applied to equity items.

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Definitions:

Liquidity

The ability of an asset to be converted into cash quickly without significantly affecting its price.

Solvency

The ability of a company to meet its long-term financial commitments and continue its operations.

Profitability

The ability of a company to generate earnings as compared to its expenses and other relevant costs incurred during a specific period.

Working Capital

The difference between a company's current assets and current liabilities, indicating the liquidity available to fund its operations and growth.