It is another name for an international transaction.
It is a transaction that involves payment at a date sometime in the future.
It is a business deal denominated in a currency other than a company's domestic currency.
It is an economic event measured in a currency other than U.S. dollars.
They should be deferred on the Balance Sheet until the cash is paid.
They should not be recognized until cash is received to complete the transaction.
They should be recorded on the Income Statement in the period the exchange rate changes.
They should be deferred on the Balance Sheet until an offsetting foreign exchange gain is realized.
The fair value hedge must completely offset the variability in the cash flow from the foreign currency receivable or payable.
The cash flow hedge can only be used to offset potential foreign currency losses on accounts receivable.
The cash flow hedge must completely offset the variability in cash flow from the foreign currency receivable or payable.
The fair value hedge can only be used to offset the variability in cash flow from long-term fixed assets related to foreign currency fluctuations.
The price to buy a foreign currency
The price to buy foreign goods
The difference between the price of goods in a foreign currency and the price in a domestic currency.
The cost to hold all monetary assets in a single currency
$7,000,000,000 (7 billion dollars)
$70,000,000,000 (70 billion dollars)
$37,000,000,000 (37 billion dollars)
$7,000,000,000,000 (7 trillion dollars)
They may be shown on the balance sheet or they may be treated as off-balance sheet investments.
They must be shown on the balance sheet at fair value.
They must be shown on the balance sheet at historical cost.
They may be shown on the balance sheet at historical cost or at net realizable value.
Euro-zone trading partners no longer need to hedge each other's currencies.
Accounts receivable from sales to a customer in one Euro-zone country acts as a natural hedge against accounts payable to a supplier in another Euro-zone country for companies outside the Euro-zone.
There are fewer currencies to hedge.
All of the above.
It is the currency used by all countries in the European Union.
It is pegged to the U.S. dollar.
It is the currency required to be used in financial reporting under international accounting standards.
None of the statements above is true.
Foreign exchange gains almost never occur, so there is no reason to have an accounting standard for it.
It violates the principle of conservatism.
It is not objective.
There is no reliable method for measuring unrealized foreign exchange gains.
The exchange rate that is used to buy a foreign currency today.
The price that will be paid for goods in a forward contract.
The exchange rate that will be used if a foreign currency option is executed.
The difference between the wholesale rate and the retail rate for foreign currency exchange.
The possibility that an asset denominated in U.S. dollars will decline in value because of changes in the foreign exchange rate.
The possibility that an asset denominated in a foreign currency will change in value because of a change in the foreign exchange rate.
The loss resulting from an import purchase when a foreign currency appreciates.
The loss resulting from an import purchase when a foreign currency depreciates.
The forward rate at the date the contract was entered.
The current forward rate for a contract that matures on the same dates as the forward contract that was entered into.
A discount rate to determine the present value of the contract.
All of the above information is needed.
Companies may choose whether to account for derivatives as cash flow hedges or fair value hedges.
If a derivative qualifies as a cash flow hedge, a company may choose to account for it as a fair value hedge.
If a derivative is considered a cash flow hedge, it must be accounted for as such.
Hedge accounting is only advantageous when a foreign currency depreciates between the transaction date and the payment date.
The spot rate
The exact rate
The forward rate
The retail rate
A one-transaction perspective must be used.
The two-transaction perspective must be used.
A sale is not recorded until payment is received and converted to U.S. dollars.
A sale is not recorded until payment is received in the foreign currency.
Hedge of an unrecognized foreign currency firm commitment
Hedge of a recognized foreign-currency-denominated asset
Hedge of a forecast foreign-currency-denominated transaction
Hedge of net investment in foreign operations
Debit FOREIGN CURRENCY OPTION for $100,500
Credit FOREIGN CURRENCY OPTION for $100,500
Debit FOREIGN CURRENCY OPTION for $500
Debit HEDGE EXPENSE for $500
Any of the above methods may be used under both the temporal and current method.
Standards of the IASB and U.S. GAAP are generally consistent for translating foreign currency financial statements.
Some countries have no rules for translating foreign currency financial statements.
Significant differences exist among some countries in the approach taken for translating foreign currency financial statements.
All of the statements are true.
Appreciation or depreciation of the foreign currency
The nature of the balance sheet exposure
Both (A) and (B)
None of the above
Only liabilities and owners' equity
All accounts translated at historical exchange rates
All accounts translated at current exchange rates
As gains or losses on the current period consolidated Income Statement
As prior period adjustments to retained earnings of the parent
As part of other comprehensive income on the consolidated balance sheet
None of the above because the current rate method is not allowed under SFAS 52