Understanding Australian Accounting Standards 3E - Loftus - SMch10_sm_loftus

《Understanding Australian Accounting Standards 3E - Loftus - SMch10_sm_loftus》由会员上传分享，免费在线阅读，更多相关内容在学术论文-天天文库。

1、SolutionsManualtoaccompanyUnderstandingAustralianAccountingStandardsJaniceLoftus,KenLeo,RuthPicker,VictoriaWise,KerryClarkByKenLeoJohnWiley&SonsAustralia,Ltd2013SolutionsManualtoUnderstandingAustralianAccountingStandardsChapter10:Translationofthefinancialsta

2、tementsofforeignentitiesComprehensionquestions1.Whatisthepurposeoftranslatingfinancialstatementsfromonecurrencytoanother?Para3ofAASB121notes2areasofapplication:·Translationofresultsandfinancialpositionofforeignoperationsforthepurposeofincludingthoseresultsin

3、theconsolidatedfinancialstatementsofagroup,ortoallowaninvestortoequityaccountfortheseresults.·Translationofanentity’sresultsandfinancialpositionintoanothercurrencyforpresentationpurposes2.Whatismeantby‘functionalcurrency’?Para8ofAASB121definesfunctionalcurre

4、ncyas“thecurrencyoftheprimaryeconomicenvironmentinwhichtheentityoperates”.3.Whatistherationalebehindthechoiceofanexchangerateasanentity’sfunctionalcurrency?Oneoftheobjectivesofthetranslationprocessistoprovideinformationthatisgenerallycompatiblewiththeexpecte

5、deconomiceffectsofanexchangeratechangeonanentity’scashflowsandequity.Aparententitythathasaninvestmentifaforeignsubsidiaryhasassetsunderitscontrolthatareexposedtoachangeintheexchangerate.Capturingtheextentofthisexposureshouldbereflectedinthechoiceofexchangera

6、te.Whereasubsidiaryactssimplyasaconduitfortheparent’stransactions,thentheconsolidationapproachmusttreattheforeigncurrencystatementsofthesubsidiaryasartefactsthatmustbetranslatedintothecurrencyoftheparent.Wherethesubsidiaryisnotjustaconduitfortheparent,butthe

7、latterisdependentonitsowneconomicenvironmentthanthechoiceofexchangeratemustreflectthefactthatthefunctionalcurrencyisthatofthesubsidiarynottheparent.4.Whatguidelinesareusedtodeterminethefunctionalcurrencyofanentity?Seeparagraphs9-12ofAASB121andsection23.//oft

8、hetext.5.Howarestatementofprofitorlossandothercomprehensiveincomeitemstranslatedfromthelocalcurrencyintothefunctionalcurrency?Incomeandexpenses:thesearetranslatedattheratecurrentatthedateofpayme