Foreign Operations

Question 1

Primary factors when determining functional currency

Answer 1

currency influencing sales prices for goods and services

currency of the country whose competitive forces and regulations determine sale prices

currency mainly influencing input costs

Question 2

Secondary factors should be considered if primary indicators cannot be determined

Answer 2

The currency in which funds / receipts:

are generated from financing activities

are retained from operating activities

Question 3

Presentation Currency

Answer 3

Currency in which an entity REPORTS its financial results

Question 4

Integrated Operation

Answer 4

Functional currency is the Canadian dollar

Question 5

Self-Sustaining Operation

Answer 5

Functional currency is NOT the Canadian dollar

Question 6

Disclosure of Foreign Currency Transactions (IFRS)

Answer 6

Entity’s functional currency

amount of foreign exchange (FX) gain / loss in the income statement

if there was a change in the functional currency during the year:

what that change was (original and new currency)

the rationale supporting the change

Question 7

Monetary Items

Answer 7

Receivables

Payables

Loans

Translated at the CLOSING rate on the BS date

Question 8

Non-Monetary Items

Answer 8

Inventory

Prepaid Expenses

PP&E

Intangibles

Translated at SPOT RATE (at historical cost) when they were purchased - no gains or losses until derecognition