When Translating the Financial Statements of a Foreign Operation to Presentation

question 10

Multiple Choice

When translating the financial statements of a foreign operation to presentation currency,AASB 121 requires any gain or loss on translation of the accounts to be:

• A) Recognised as a revenue or expense in the income statement.
• B) Transferred to a reserve in the equity section of the balance sheet.
• C) Deferred and amortised over a period of not greater than 20 years.
• D) Written off against the non-monetary assets of the foreign operation with any balance remaining recognised as a revenue or expense in the period.
• E) None of the given answers.

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Definitions:

Direct Method

A way of preparing the cash flow statement where actual cash flows from operating activities are listed directly.

Operating Activities

Business activities related to the day-to-day functions of producing goods or offering services, impacting the company's cash flow.

Going Concern

An accounting principle that assumes a company will continue to operate and remain in business for the foreseeable future.

Financing Activities

Financial operations that impact a company’s capital structure, including issuing debt, repaying loans, and equity transactions.