Ch10 - Foreign Currency Flashcards
1
Q
Monetary vs Non-Monetary Items
A
Monetary = easily converted into cash, e.g. receivables, payables, loans
Non-monterary = inventory, plant and machinery
2
Q
Settled Transactions
A
Translate at the date of payment using historic rate at that date
Difference goes to SoPL
3
Q
Unsettled Transactions
A
Retranslate at the closing rate
If non-monetary, keep at historic rate
4
Q
Treatment of exchange differences
A
Trading transactions: operating income/expenses
Non-trading transactions: interest receivable/finance ccosts
5
Q
Non-monetary items
A
Cost model: kept at historic rate and not retranslated
Revaluation/FV model: Initially use historic rate, when revalued, incorporate the exchange rate into it. Don’t recognise it separately
