Question

Question No: 2

Short Theory Questions:                                                                  

Note: Answer the following questions:                                                                                                                                             

1. What are revaluation model of the property, plant and equipment?
2. What is current rate method?
3.   What is horizontal analysis?

Answer all (Write in box “True or False “ )

1. Transfer pricing is setting prices on goods and services exchanged between separate divisions within the same firm and these prices have a direct impact on the profits of the different division.

                                                                                                               (           )

2. Harmonization is the process of increase of alternatives while maintaining a low degree of flexibility in accounting practices.

                                                                                                               (            )

3. Temporal method objective is to translate financial statements as if the subsidiary had been using the parent’s currency.

                                                                                                               ( )

Please answer all Question ........ Tank you very much for you

Answer 1

Revaluation model of the PPE

Under the revaluation model, an asset is carried at its fair value (i.e. revalued amount) less any accumulated depreciation and any accumulated impairment losses. Revaluations should be made with sufficient regularity to ensure that the carrying amount does not differ materially from fair value at the end of the reporting period

Current Rate Method

The current rate method is a method of foreign currency translation where most items in the financial statements are translated at the current exchange rate.

Horizontal analysis

Horizontal analysis is used in FS analysis to compare historical data, such as ratios, or line items, over a number of accounting periods.

TRUE

Transfer pricing is setting prices on goods and services exchanged between separate divisions within the same firm and these prices have a direct impact on the profits of the different division.

FALSE

Harmonization is the process of Reduction of alternatives while maintaining a high degree of flexibility in accounting practices.

True

Temporal method objective is to translate financial statements as if the subsidiary had been using the parent’s currency.