Which of the Following Statements Is Correct with Respect to AASB

question 47

Multiple Choice

Which of the following statements is correct with respect to AASB 121 The Effects of Changes in Foreign Exchange Rates?

• A) When there is a change in an entity's functional currency, the entity shall apply the translation procedures applicable to the new functional currency prospectively from the date of the change.
• B) When there is a change in an entity's functional currency, the entity shall apply the translation procedures applicable to the new functional currency retrospectively from the date of the change.
• C) Exchange differences arising from the translation of long-term monetary items are recognised in profit or loss on settlement.
• D) Exchange differences arising from long-term monetary items are deferred and amortised into operating profit or loss over the term of the long-term monetary asset or liability.

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Definitions:

Operations Year

The 12-month period used by businesses to measure financial and operational performance, often aligning with the fiscal year but not necessarily the calendar year.

Defined Contribution Plan

A pension plan in which the contributions into the plan are defined but the employee’s pension may vary depending on investment performance.

Annual Pension Benefit

The amount of money an individual receives from a retirement plan each year after retirement.

Installment Note

A debt that requires the borrower to make equal periodic payments to the lender for the term of the note.