Under the translation method required by AASB 121,the approach to translating a foreign operation's accounts includes:
A) translating post-acquisition changes in equity at the exchange rate current at the date of the change.
B) translating non-monetary assets at the spot exchange rate at the date of the purchase transaction.
C) translating revenue and expense items at the average rate for the period where the revenues and expense transactions have been evenly distributed over the period.
D) translating proposed distributions from retained profits at the exchange rate current when the distributions are completed in cash.

Question

Quizplus · Accepted Answer

Under the translation method required by AASB 121, revenue and expense items should be translated at the average rate for the period where the revenues and expense transactions have been evenly distributed over the period. This ensures that the impact of fluctuations in exchange rates is evenly spread over the period and reflects the economic reality of the transactions. Option A refers to translating changes in equity, which is correct but does not apply to the approach to translating a foreign operation's accounts. Option B refers to translating non-monetary assets at the spot exchange rate, which is also correct but only applies to the initial recognition of non-monetary assets. Option D refers to translating proposed distributions from retained profits, which is not relevant to the approach to translating a foreign operation's accounts.

Under the Translation Method Required by AASB 121,the Approach to Translating