ACCTG 102 Lecture Notes - Lecture 31: Spot Contract, Swiss Franc
Document Summary
Translation of foreign currency financial statements method used to translate foreign entity. Remeasurement foreign entity does not maintain books in functional currency. The local currency accounts are remeasured to functional currency temporal method. Translation accounts measured in functional are translated to reporting currency using the current rate method. Board prescribed that f/s of a foreign entity operating in highly inflationary economy shall be remeasured as if the functional currency were the reporting currency (us$). This means foreign f/s should be translated using the temporal method. Foreign entity operates in an economy that is not highly inflationary where not highly inflationary economy must identify the functional currency: local is the functional currency accounts are translated into us$ using current rate method. Adjustment is reported in current period i/s: the functional currency is currency of third country first remeasure to foreign currency (temporal) then translate into us$ using current rate approach translation gains/losses from temporal reported in income.
