Currency Translation Flashcards
Functional currency is defined as
The currency of the primary economic environment in which the entity operates or the currency in which most of the subsidiaries transactions are denominated
When the exchange rate increases
There is debtor loss
When the exchange rate decreases there is
Debtor gain
What exchange rate is to be used to translate a foreign operations capital accounts
Historical
Under IFRS what events are used to measure the rate of exchange
Date of Transaction (Delivery), Balance sheet date and settlement
When selling merchandise what rate should be used to calculate the Receivable
Spot rate at date of transaction
Foreign currency translation adjustment can be computed as
Net Assets - Adjusted Net Assets
In remeasurement what rate are inventories carried at cost measured at
Historical exchange rate (most items use the current exchange rate)
What exchange rate is used for revenues and expenses (generally)
Weighted average exchange rate
How is gain or loss on a forward contract computed
Multiplying Foreign Currency amount by the difference between the spot rate at the bs date and the spot rate at the inception of the contract
Where do remeasurement gains and losses and tranlslation gains losses close too, respectively
Remeasurement gains - continuing operations of income statement
Translation adjustments - OCI
