Under AASB 121 the Effects of Changes in Foreign Exchange

question 21

Multiple Choice

Under AASB 121 The Effects of Changes in Foreign Exchange Rates,an entity must disclose which of the following items in particular?
I.The amount of exchange differences included in profit or loss of the period.
II.The amount of the exchange difference included directly in share capital during the period.
III.Whether a change in the functional currency has occurred.
IV.The reason for using a presentation currency that is different from the functional currency.

• A)I,II,III and IV
• B)II and III only
• C)I,III and IV only
• D)I and IV only

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Definitions:

Economic Profits

The excess of total revenue over total costs, including both implicit and explicit costs.

Implicit Costs

Costs that represent the opportunity cost of using resources that are not directly paid for, such as the owner’s time or the use of assets owned by the firm.

Explicit Costs

Direct, out-of-pocket payments for resources or services used in the production process.

Accounting Profits

Represents the difference between total revenue and explicit costs of a firm.