Foreign Currency Transactions Flashcards

1
Q

How do transactions denominated in in a currency other than a company’s functional currency affect the income statement?

A

Fluctuations in that currency cause a gain or loss that must be recognized on the income statement as Income from Continuing Operations

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2
Q

What causes a Foreign Currency Transaction G/L?

A

A change in exchange rates between the functional currency and the transaction currency

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3
Q

Where are Foreign Currency Transaction G/L recorded?

A

Income Statement

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4
Q

Where are Foreign Currency Translation G/L recorded?

A

OCI

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5
Q

If the Functional Currency equals the Local Currency - what rate is used for translating Assets and Liabilities?

A

Current Rate as of the Balance Sheet Date

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6
Q

If the Functional Currency equals the Local Currency - what rate is used for translating Revenues and Expenses?

A

Weighted Average Exchange Rate for the year

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7
Q

If the Functional Currency equals the Reporting Currency - what Exchange Rate is used??

A

Use Weighted Average - Historical Exchange Rates (Inventory and Pre-paid Assets and Property Plant and Equipment) and Current Exchange Rates (Monetary Assets and Liabilities and Inventory @ Market and Trading Securities and Deferred Taxes)

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