1. What rates are used to translate the following:

1. the assets and liabilities of a foreign operation?
2. the share capital and pre-acquisition reserve of foreign operation?
3. the income and expenses of a foreign operation. Is there any exceptions allowed?

2. Explain the exchange differences that arise:

(a) on translating the financial statements of a foreign operation;

(b) on the preparation of the resultant consolidated financial statements.

3. What is the accounting treatment for exchange differences which arise under the presentation currency method?