Which standard governs foreign exchange under IFRS?

Here are the answers to questions 16-27, following the specified format:

16. On acquisition date, subsidiary's retained earnings represent:

• The correct option is C. $$\boxed{\text{C. Pre-acquisition profit}}$$ On the acquisition date, the subsidiary's retained earnings existing prior to the acquisition are considered pre-acquisition profits. These are typically eliminated during consolidation.

17. Consolidation adjustments are made in:

• The correct option is C. $$\boxed{\text{C. Consolidation worksheet}}$$ Consolidation adjustments are typically made in a consolidation worksheet to combine the financial statements of the parent and subsidiary without altering their individual ledgers.

18. Non-controlling interest is calculated based on:

• The correct option is B. $$\boxed{\text{B. Subsidiary's net assets}}$$ Non-controlling interest (NCI) represents the portion of equity in a subsidiary not attributable to the parent. It is calculated based on the subsidiary's net assets.

19. Consolidated financial statements present the group as:

• The correct option is B. $$\boxed{\text{B. Single economic entity}}$$ Consolidated financial statements present the financial position and results of operations of a parent and its subsidiaries as if they were a single economic entity.

20. Which standard governs consolidation under IFRS?

• The correct option is C. $$\boxed{\text{C. IFRS 10}}$$ IFRS 10 Consolidated Financial Statements sets out the principles for the presentation and preparation of consolidated financial statements.

21. Functional currency is determined based on:

• The correct option is C. $$\boxed{\text{C. Primary economic environment}}$$ Under IAS 21, the functional currency is the currency of the primary economic environment in which an entity operates.

22. Foreign currency monetary items are translated using:

• The correct option is C. $$\boxed{\text{C. Closing rate}}$$ Under IAS 21, monetary items (e.g., cash, receivables, payables) are translated using the closing rate at the reporting date.

23. Non-monetary items measured at historical cost are translated using:

• The correct option is B. $$\boxed{\text{B. Historical rate}}$$ Under IAS 21, non-monetary items measured at historical cost (e.g., property, plant, and equipment, inventory) are translated using the exchange rate at the date of the transaction (historical rate).

24. Foreign operation results are translated using:

• The correct option is C. $$\boxed{\text{C. Average rate for income, closing rate for assets}}$$ For translating the financial statements of a foreign operation, income and expense items are typically translated at average rates for the period, while assets and liabilities are translated at the closing rate.

25. On disposal of a foreign operation, cumulative exchange differences are:

• The correct option is C. $$\boxed{\text{C. Recycled to profit or loss}}$$ Upon the disposal of a foreign operation, the cumulative exchange differences previously recognized in other comprehensive income are reclassified from equity to profit or loss.

26. Which item is considered monetary?

• The correct option is C. $$\boxed{\text{C. Trade receivable}}$$ Monetary items are assets and liabilities to be received or paid in a fixed or determinable number of units of currency. Trade receivables represent a right to receive a fixed amount of cash.

27. Which standard governs foreign exchange under IFRS?

• The correct option is B. $$\boxed{\text{B. IAS 21}}$$ IAS 21 The Effects of Changes in Foreign Exchange Rates is the standard that governs accounting for foreign currency transactions and foreign operations.