Apart from Some Limited Exceptions,AASB 121 Requires That Exchange Differences

question 2

Multiple Choice

Apart from some limited exceptions,AASB 121 requires that exchange differences on monetary items shall be:

• A) deferred and recognised when the associated asset or liability is realised or settled.
• B) treated as a reserve or provision against the associated monetary item.
• C) not recognised in the accounts until the monetary asset is received or monetary liability settled.
• D) recognised as income or an expense in the reporting period in which the exchange rates change.

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Definitions:

Trading Securities

Financial instruments such as stocks and bonds that are bought and sold for the purpose of generating profits on short-term fluctuations in their prices.

Held-to-Maturity Securities

Held-to-maturity securities are debt securities that an investor intends and is able to hold until their maturity date, recorded at amortized cost.

Unrealized Holding

Gains or losses on investments that have not yet been sold and so are not yet reflected in the income statement.