Set 8 FR 29 Foreign Ops Flashcards
Define foreign operation
An entity that is operating in a foreign country, in a different currency.
Define presentation currency
Currency in which entity reports it’s FS
Primary criteria for determining functional currency
currency influencing sales prices for goods and services
currency of country whose competitive forces and regulations determine sale prices
currency influencing input costs
Secondary criteria for determining functional currency
currency in which funds/receipts are generated from financing activities
currency in which funds are retained from operating activities
Two types of foreign ops. Differences between them.
Integrated - functional currency is same as reporting entity.
Self-sustaining - functional currency is different from reporting entity.
Method of translations used for integrated ops
Temporal
Method of translations used for self-sustaining ops
Current rate
Temporal method - revenue and most expenses
Average for period
Temporal method - depreciation and amoritzation
Historical cost - use date of purchase for related asset
Temporal method - COGS
Opening - closing translated balance
Purchases - average for period
Ending - Rate based on when purchased; often average for last month of year is appropriate
Temporal method - monetary assets and liabilities
Closing spot rate
Temporal method - non-monetary assets and liabilities - historical cost
Spot rate on date of purchase
Temporal method - non-monetary assets and liabilities - fair value
Date of revaluation
Temporal method - sharesa
Date of purchase
Temporal method - retained earningsq
Calculated
Temporal method - dividends
Declaration date
Temporal method - gain/loss
Net income
Temporal method - financing income/expenses
Average for period
Current rate method - revenue/most expenses/depreciation/COGS
Average for period
Current rate method - monetary assets and liabilities and non-monetary assets and liabilities measured at historical cost
Closing spot rate
Current rate method - non-monetary assets/liabilities - FV
Date of revaluation
Current rate method - shares
Date of purchase
Current rate method - retained earnings
Calculated
Current rate method - dividends
Declaration date
Current rate method - G/L
OCI
ASPE differences
No OCI, so all transactions flow through income statement and retained earnings
