When a Company Holds a Receivable Denominated in a Foreign

question 43

Multiple Choice

When a company holds a receivable denominated in a foreign currency and the foreign currency strengthens from the date of sale to the date of payment, the company will record:

• A)a foreign-currency transaction gain.
• B)a foreign-currency transaction loss.
• C)no foreign-currency transaction gain or loss.
• D)none of the above.

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Definitions:

Goodwill

An intangible asset that arises when a business is purchased for more than the fair value of its net identifiable assets, representing elements like reputation, customer loyalty, etc.

AASB 3

An accounting standard issued by the Australian Accounting Standards Board that deals with the accounting requirements for business combinations.

Business Combination

A transaction or other event in which an acquirer gains control of one or more businesses.

Fair Value Adjustments

Amendments made to the book value of assets or liabilities to align them with their fair value.