Fin 2 - Foreign Currency Acct'g

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Author:
Ricksta760
ID:
214444
Filename:
Fin 2 - Foreign Currency Acct'g
Updated:
2013-04-19 01:41:02
Tags:
FAR CPA Financial foreign currency accounting
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Description:
foreign currency acct (cPa review)
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  1. Remesaurement Method (Dysfunctional)
    • 1. Restate B/S Items:
    • Monetary items = year end rate (fixed)
    • Non-Monetary = Historical rate (fluxatte)
    • 2. Restate I/S Items:
    • Non-B/S related items = weighted avg
    • b/s items = Historial rate
    • -depreciation/ppe
    • -COGS/inventory
    • Amortization/bonds
    • 3. Gain<loss> plug to Net Income to get the req amt needed to adj R/E in order to make the b/s balance
  2. Presentation of Fin Stmts in a highly inflationary economy GAAP & IFRS
    • GAAP:
    • req remeasurement method
    • IFRS:
    • 1. first restated for effects of inflation
    • 2. converted from the foreign currency to the reporting currency using the yr end rate for ALL elements of both B/S and I/S
  3. Translations Method (Functional)
    • 1. if the fin stmts are in the subs functional $ the fin stmts are translated to the reporting currency starting w/the I/S
    • 2. Income Statement:
    • ALL I/S items = weighted avg
    • transfer Net Income to R/E
    • 3. B/S:
    • Assets&Liabilities: Year end Spot Rate
    • common stock/equity: Historical
    • r/e : roll forward
    • 4. Gains<Loss> to other Comprehensive Income. Diff between debits and credits in the translated trial balance.
  4. Where are conversion adj for Translation method shown?
    Shown in OCI, contra to Equity in B/S (accum. translations)

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