BU487 Chapter Notes - Chapter 11: Current Liability, Income Statement, Retained Earnings
Document Summary
Chapter 11 translation and consolidation of the financial statements of foreign operations. Foreign currency risk: translation exposure (accounting exposure) exposure from foreign currency f/s converted to. Functional currency translation (fct) t(cid:396)a(cid:374)slate fo(cid:396)eig(cid:374) ope(cid:396)atio(cid:374)s i(cid:374)to it"s fu(cid:374)ctio(cid:374)al cu(cid:396)(cid:396)e(cid:374)cy, gives the same results as if the transactions had occurred in canadian dollars in the first place. Income statement: fct, sales = average rate, less: cogs, add: beginning inv = historical rate, add: purchases = average rate. Less: ending inv = average rate: less: depreciation expense = average rate, less: other expense = average rate, net income = above, add/less: gain, comprehensive income = added the gain. Balance sheet: fct assets and liabilities are closing, stuff recorded at cost should use historical, inv has its own rate, assets = use closing. Finding translation gain from ad with impairment: actual goodwill calculated goodwill, ad = price you paid net assets dec 31, y1, calculated goodwill, ad * historical rate.
