IAS 39 on Speculative Forward Exchange Contracts Requires That the Contract

question 22

Multiple Choice

IAS 39 on speculative forward exchange contracts requires that the contract be:

• A)revalued using spot rates throughout its life with any gains or losses to be deferred and amortized as they occur.
• B)revalued at fair value throughout its life with any gains or losses to be deferred and amortized as they occur.
• C)valued using spot rates throughout its life with any gains or losses to be taken into income as they occur.
• D)revalued at fair value throughout its life with any gains or losses to be taken into income as they occur.

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Definitions:

Maturity Value

The amount of money that an investment will grow to at the end of its investment period.

Compounded Monthly

Interest on an investment or loan calculated each month and added to the balance, so that subsequent interest calculations include interest on the previous interest.

Receivable Contract

An agreement where one party has the right to receive a payment or series of payments from another party.

Discount Rate

The interest rate used in discounted cash flow (DCF) analysis to determine the present value of future cash flows.