When translating foreign currency denominated financial statements into the functional currency, the exchange differences are recognised:
A) in profit or loss in the period in which they arise.
B) directly in the retained earnings account.
C) as a deferred asset or liability and amortised over a period of 10 years.
D) as a separate component of equity.

Question

Quizplus · Accepted Answer

Exchange differences arising from translating foreign currency denominated financial statements into the functional currency are recognised in profit or loss in the period in which they arise, according to International Financial Reporting Standards (IFRS).

When Translating Foreign Currency Denominated Financial Statements into the Functional