Foreign Currency Translation

Foreign Currency Translation Assignment 1. According to SFAS 52, in good example there is a U.S. company and its accessory is in a foreign country and the subsidiary is poised and interconnected with its topical anesthetic economy, FASB requires the set up to office the trustworthy set system for variation the subsidiarys financial statements. FASB created the functional silver fantasy to determine that a subsidiary is self-contained and not integ prescribed with its p band company or not; if the functional flowingness (the direct currency of the foreign subsidiarys trading operations) is the local anesthetic currency where the subsidiary is located, the subsidiary is not integrated with its p atomic number 18nt and then the p bent use the current rate method for translation. For the current method, the income statement accounts are translated with the burthen average qualify rate. In this method, all assets and liabilities are translated with the current transposition rate which is on the balance sheet sacrosanct wind and the stockholders equity items are translated with the historical counterchange rate which is on the action date except the retained remuneration account is translated with composition of exchange rates of its calculation accounts. some(prenominal) translation adjustment results are recorded as accumulated unrealized gain/ divergence account to other comprehensive income until it is realized in the future.

For IFRS IAS 21, it is analogous to the way used in SFAS 52. The assets and liabilities are translated with the cl osing (current) exchange rate, and the incom! e and expense are translated with their transaction dated exchange rate. Any translation adjustment results are recorded to other comprehensive income. 2. For McDonalds company as an example, the functional currency of operations outside the U.S. is the respective local currency. In 2011, foreign currency translation had a constructive impact on consolidate operating results driven by the stronger Euro and Australian Dollar as well as nigh other currencies. In...If you want to get a full essay, bless it on our website: OrderCustomPaper.com

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