Page 105 - Finac1 Test 2 slides
P. 105

THE EFFECTS OF CHANGES IN FOREIGN EXCHANGE RATES



            Definitions









            • Average rate: average exchange rate over a specified period


            • Monetary items – units of currency held, and assets and

                liabilities to be received or paid, in a fixed or determinable

                number of units of currency, for example, bank accounts,

                fixed deposits, trade receivables, loans, and trade payables.


            • Non-monetary items – the essential feature is the absence

                of a right to receive (or an obligation to deliver) a fixed or

                determinable number of units of currency, for example

                inventories and property, plant and equipment.


            • Fair value – the price that would be received to sell an asset

                or paid to transfer a liability in an orderly transaction

                between market participants at the measurement date.




                                                                                                                                 105
   100   101   102   103   104   105   106   107   108   109   110