The most important currency in the business Question Answer 2022

Answer 1) B. The most important currency in the business of a given company
Explanation: A functional refers to the currency in which the business’s income and
expenses are generated. Hence, when it comes to a foreign subsidiary company, the same
conducts and presents their business operations in the functional currency in their respective
state currency.
Answer 2) C. The exchange rate at the balance sheet date
Explanation: The translation of the foreign subsidiary financial statements are done into the
parent’s presentation currency at the yearend rates. The said transition is on the year end rates
to avoid the numerous rates on different items of assets and liabilities.
Answer 3) B. Other comprehensive income
Explanation: As per FRS 102, all the exchange differences shall be recognised in other
comprehensive income, Croner1.
Answer 4) D. $5.75 million
Explanation: The closing rate would be used for the said presentation. As stated above, the
transition rate used in the year end rate for the reporting in the balance sheet.
Answer 5) C. A timing difference
Explanation: The timing difference would arise on different value of the same asset in the
organisation’s books and for the purposes of the tax computations.
Answer 6) D. Tax payable (liability)
Explanation: The tax payable liability recorded in the books of an enterprise on year end is
paid in cash to the regulators next year.
Explanation: The tax on the taxable profits of an enterprise is stated as Tax payable.
Answer 7) E. None of the above
Explanation: The total profit of the entity is $ 110 million. However, out of which $ 80
million is taxable in the current year. $ 30 million is deferred tax income for the current year.
The current tax would be payable by the entity on $ 80 million, with deferred tax liability
creation on $ 30 million.
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