Which of the Following Statements Is Correct with Respect to AASB

question 16

Multiple Choice

Which of the following statements is correct with respect to AASB 112 "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.
• E) None of the given answers.

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Definitions:

CPI

Tracking the average evolution in pricing for a collection of goods and services purchased by people in urban areas, the Consumer Price Index serves as an indicator of these changes over time.

Consumer Price Index

The Consumer Price Index measures the average change over time in the prices paid by consumers for a basket of goods and services.

Base Year

Base year is a specific year against which economic growth or other market indices are measured, serving as a standard or reference point for economic analysis.

CPI

The Consumer Price Index reflects the weighted average price changes in a variety of consumer goods and services, such as medical services, food, and transportation.