Chapter 10

Question 1

What does IAS 21 deal with?

Answer 1

Definition of functional and presentation currencies
Accounting for individual transactions in a foreign currency
Translating Financial statements of a foreign subsidiary

Question 2

What is a functional currency?

Answer 2

Current of the primary economic environment in which the entity operates

Question 3

What things should an entity consider when determining currency?

Answer 3

Currency that influences sales prices for goods and services
Currency of country whose competitive forces and regulations determine prices of good and services
Currency that influences labour, material and other costs

Question 4

What is presentation currency?

Answer 4

Currency in which the entity presents its financial statements

Question 5

What rate is transaction initially recorded as?

Answer 5

Historic rate

Question 6

What exchange rate shall we use on cash settlements?

Answer 6

Exchange rate at settlement date

Question 7

What should monetary items held at YE be retranslated as?

Answer 7

Closing rate

Question 8

Where should any exchange differences arising on retranslation of monetary item be take to?

Answer 8

SPL

Question 9

Do non monetary items need to be translated?

Answer 9

NO