Foreign Operations Flashcards

1
Q

Foreign Currency Transactions

A

A transaction that will be settled through the payment or receipt of foreign currency, recognized in the functional currency using the exchange spot rate

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2
Q

Spot Rate

A

The rate that is effective on a particular date

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3
Q

Functional Currency

A

The currency that has the greatest economic impact on the entity’s financial performance. Generally it’s the local currency

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4
Q

Transactional Currency

A

Local

currency of a particular company
usually what the books and records are kept in

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5
Q

Functional Currency

A

Greatest Economic impact on the company

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6
Q

Reporting Currency

A

Currency in which the entity prepared it’s financial statements (US in most cases)

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7
Q

Remeasured

A

when a transaction takes place in something other than the functional currency it’s remeasured as if it had taken place in the functional currency

Difference between transactional and functional
goes on Income statement

Functional=Reporting

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8
Q

Translated

A

when the functional currency is not the same as what’s used for reporting amounts are translated from the functional currency to the reporting currency

Difference between functional and reporting
goes on balance sheet

Functional=Reporting
Functional=Transactional

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9
Q

Payable or receivable in foreign currency

A

remeasured at each balance sheet date reported as income or loss on foreign currency transaction gain or loss

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10
Q

Foreign Exchange Contract

A

agree to exchange one currency for another at a specific rate at a specific time in the future

Reported at fair value with gains/losses on the income statement

Hedge

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11
Q

Forward Rate

A

what the rate is expected to be at a future date

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12
Q

Translation Rates

A

Assets/Liab-current rate
income statement-weighted average
Contributed Capital-historical

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13
Q

Remeasurement Rates

A

Monetary Assets/liab-current
Non-monetary Assets/liab-historical
Income Statement-weighted average

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