Foreign Operations

Question 1

Functional Currency

Answer 1

Has the greatest economic impact on the entity’s financial performance; currency in which entity generates and expends cash

Question 2

Transactional Currency

Answer 2

aka Local Currency; the currency of a particular country; usually the books and records are kept

Question 3

Reporting Currency

Answer 3

Currency in which the enterprise prepares its financial statements

Question 4

When do we use translation?

Answer 4

When Transactional and Functional are both the same, but different than reporting; goes to BS as part of OCI (“denT”)

Question 5

When do we use remeasurement?

Answer 5

When Functional and Reporting are both the same, but different than transactional; goes to I/S