Asked by Konner Powers on Jun 28, 2024
Verified
When translating the revenue and expenses in the statement of profit or loss and other comprehensive income, theoretically each item of revenue and expense should be translated using the spot exchange rate between the:
A) functional currency and the foreign currency on the reporting date.
B) presentation currency and the local currency on the transaction date.
C) presentation currency and the functional currency on the reporting date.
D) functional currency and the foreign currency on the date the transaction occurred.
Spot Exchange Rate
The exchange rate at a point of time for immediate delivery of the currency in an exchange.
Presentation Currency
The currency in which a company's financial statements are presented, typically the national currency of the country where the company is headquartered.
Functional Currency
The currency of the primary economic environment in which an entity operates, typically used in preparing financial statements.
- Ascertain the specific exchange rates utilized for the translation of different transaction and balance forms, encompassing assets, liabilities, equity, revenue, and expenses.
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Learning Objectives
- Ascertain the specific exchange rates utilized for the translation of different transaction and balance forms, encompassing assets, liabilities, equity, revenue, and expenses.
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