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:

Total Assets

The complete sum of everything a company owns, both current and long-term, that can be used to produce value.

Accounts Receivable

Amounts owed to a business by its customers for goods or services delivered but not yet paid for.

Horizontal Analysis

A financial analysis technique that compares historical financial data over a sequence of reporting periods, using a base period to identify trends and growth patterns.

Vertical Analysis

A method of financial statement analysis in which each line item is listed as a percentage of a base figure, facilitating comparisons.