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level: Foreign Currency

Questions and Answers List

level questions: Foreign Currency

Question	Answer
What is the first step in a foreign currency translation?	Adjust to GAAP
What method do you use to convert from Local Currency to Functional Currency?	Remeasurement Method
What method do you use to convert from Functional Currency to Reporting Currency?	Translation Method
Foreign Currency: Functional currency CAN be the same as the Reporting Currency. If so, you do not need to use the ??? Method.	Translation Method
In the REMEASUREMENT Method, which FS do we calculate FIRST?	Balance Sheet
Foreign Currency: How do we adjust the BALANCE SHEET in the REMEASUREMENT Method?	Monetary: Current Year-End Exchange Rates Nonmonetary: Historical Exchange Rates PIC: Historical Exchange Rates End RE= Plug
Foreign Currency: In the REMEASUREMENT Method, which FS do we calculate SECOND?	Income Statement
How do we adjust the INCOME STATEMENT in the REMEASUREMENT Method?	DEPR, AMORT = Historical Exchange Rate Else = Weighted Average Exchange Rate G/L = Plug to get RE om BS to balance
Foreign Currency: In the TRANSLATION Method, which FS do we calculate FIRST?	Income Statement
Foreign Currency: How do we adjust the INCOME STATEMENT in the TRANSLATION Method?	All Weighted Average This will equal to End RE on B/S
Foreign Currency: In the TRANSLATION Method, which FS do we calculate SECOND?	Balance Sheet
Foreign Currency: How do we adjust the BALANCE SHEET in the TRANSLATION Method?	All Assets and Liabilities: Current Year-End Exchange Rate PIC: Historical Exchange Rate End RE: Pulled from Income Statement AOCI: Plug
Under US GAAP, in preparing the consolidated financial statements for a US parent company with a foreign subsidiary, the foreign subsidiary's functional currency is the currency...	...of the environment in which the subsidiary primarily generates and expends cash.