AASB 121 Requires That the Initial Recognition of a Foreign

question 27

Multiple Choice

AASB 121 requires that the initial recognition of a foreign currency transaction be:

• A) in the amount of the foreign currency.
• B) at the closing rate at balance date.
• C) at the rate the currency is expected to be exchanged at on the settlement date for the monetary asset or liability based on the current market price of futures contracts for the relevant foreign currency.
• D) at the spot rate at the date of the transaction.

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Definitions:

Investment Banker

A professional or firm that acts as an intermediary in large and complex financial transactions, such as mergers, acquisitions, and public offerings.

Public Stock Offering

The process by which a company sells its stock to the general public for the first time, known as an initial public offering (IPO).

TSX

The Toronto Stock Exchange, one of the largest stock exchanges in the world, based in Canada.

OTC

Over-the-counter; referring to securities traded in some context other than on a formal exchange.