BUS 420 Lecture Notes - Lecture 6: Canadian Dollar, Financial Statement, Income Statement

• School: Simon Fraser University
• Department: Business Administration
• Course: BUS 420
• Professor: Daniel Byrne

Document Summary

This chapter focuses on accounting issues on translation of financial statements of foreign operations. We will learn temporal method to translate financial statements of integrated foreign operations and current rate method to translate financial statements of self-sustaining foreign operations. The following major topics are covered in this chapter: foreign operations and translations of financial statements of integrated foreign operations, translations of financial statements self-sustaining foreign operations. Chapter outline: foreign operations and translations of financial statements of. Two major accounting questions are posed by the translation to canadian dollars of subsidiary financial statements presented in a foreign currency: The answers depend on the type of foreign currency exposure the parent faces with the foreign subsidiary. Foreign currency exposure is the risk that a loss (or gain) could occur as a result of changes in foreign exchange rates. Translation exposure this exposure results from the translation of foreign-currency-denominated financial statements into canadian dollars, giving rise to exchange gains and losses.