Foreign Currency Transactions

Question 1

Translation

Answer 1

Gains & losses go to Other Comprehensive Income

Assets & liabilities are converted using spot rate

Equity uses historical rate

Everything on the income statement uses weighted average

Sub’s functional currency is the local currency

Question 2

Remeasurement

Answer 2

Gains & losses go to Income statement

Monetary assets & liabilities use current rate

Nonmonetary assets & liabilities use historical rate

Equity uses historical

Income statement at weighted average or historical

Sub’s functional currency equals parent