F6 - M4 - Foreign Currency Accounting Flashcards
__________ are transactions denominated in a currency other than that used for financial reporting.
Foreign currency transactions
__________ is the conversion of financial statements of a foreign entity into financial statements expressed in the domestic currency (the dollar).
Foreign currency translation
_________ is the process of converting a foreign subsidiary’s financial statements from the foreign currency to the parent company’s reporting currency using the remeasurement (temporal) method and/or the translation (current rate) method.
Foreign financial statement translation
The method(s) used to restate the foreign subsidiary’s financial statements is determined by the _____currency of the foreign subsidiary.
functional
Remeasurement gains and losses are reported on the _________
income statement.
Translation gains and losses are reported in ___________
other comprehensive income
Foreign currency transactions require adjusting ___________________at year-end for changes in the dollar equivalent of the foreign currency denominated transaction since the transaction date.
the receivable or the payable
Foreign currency transactions require adjusting the receivable or the payable at year-end for changes in the dollar equivalent of the foreign currency, An additional ______ is reported when the transaction is settled in the foreign currency.
gain or loss
An entity’s _________ is the currency of the primary economic environment in which the entity operates
functional currency
Where a foreign operation is relatively self-contained and integrated within one country, the entity’s functional currency will be the ________.
local currency
Where the foreign operation is, in essence, an extension of the parent’s U.S. operations, the functional currency will be the _______.
U.S. dollar.
