Ch. 18 - Foreign Currency Transcations

Question 1

Functional Currency:

Answer 1

the primary currency it uses in its day-to-day operations

Question 2

Initial Measurement (of foreign currency transactions):

Answer 2

1. recorded using the exchange rate on that day

2. AKA the spot rate

Question 3

Subsequent Measurement - Monetary Items

Answer 3

translated at the closing rate on the balance sheet date

Question 4

Subsequent Measurement - Non-Monetary Items

Answer 4

measured at historical cost, no change in value

Question 5

Effects of Changes in Foreign Exchange Rates - IAS #

Answer 5

21

Question 6

Disclosure required:

Answer 6

1. entity’s functional currency
2. amount of foreign exchange gain/loss in IS
3. If there was a change in the functional currency
   a) what was the change
   b) the rationale for the change