What FAS 52? ASC 830 (aka FAS 52) provides the accounting and reporting requirements for foreign currency transactions and the translation of financial statements from a foreign currency to the reporting currency.
What is the objective of translation under SFAS No 52? An objective of translation under SFAS No. 52 is to avoid reporting foreign-currency-denominated operations as if they had occurred in U.S. dollars. Under SFAS No. 52, if the results of foreign-currency-denominated operations will not affect U.S. dollar cash flows, no exchange gain or loss is recorded.
What is fasb52? 8, Accounting for the Translation of Foreign Currency Transactions and Foreign Currency Financial Statements, and revises the existing accounting and reporting requirements for translation of foreign currency transactions and foreign currency financial statements.
What is a remeasurement gain? Understanding Remeasurement
What FAS 52? – Related Questions
What is the current rate method?
The current rate method is a standard method of currency translation that utilizes the current market exchange rate. Currency translation is the process of converting the financial results of a parent company’s foreign subsidiaries into its functional currency.
What is the difference between remeasurement and translation?
The key difference between translation and remeasurement is that translation is used to express financial results of a business unit in the parent company’s functional currency whereas remeasurement is a process to measure financial results that are denominated or stated in another currency into the functional currency
What’s included in OCI?
In business accounting, other comprehensive income (OCI) includes revenues, expenses, gains, and losses that have yet to be realized and are excluded from net income on an income statement. OCI represents the balance between net income and comprehensive income.
What does GAAP stand for in accounting?
Generally Accepted Accounting Principles
Generally Accepted Accounting Principles (GAAP or US GAAP) are a collection of commonly-followed accounting rules and standards for financial reporting.
What do you mean by transaction exposure?
Transaction exposure is the level of uncertainty businesses involved in international trade face. Specifically, it is the risk that currency exchange rates will fluctuate after a firm has already undertaken a financial obligation. Transaction exposure is also known as translation exposure or translation risk.
What is a reporting currency?
The reporting currency is the currency in which a company will report its financial statements. A reporting currency must be one currency, which makes it easier to understand and follow financial documents.
What is a translation gain or loss?
Translation exposure (also known as translation risk) is the risk that a company’s equities, assets, liabilities, or income will change in value as a result of exchange rate changes. In many cases, translation exposure is recorded in financial statements as an exchange rate gain (or loss).
Which accounts are remeasured using current exchange rates?
III. Under the temporal method, assets carried at current or future value (cash, marketable securities, receivables) and liabilities are remeasured at the current exchange rate. Assets carried at historical cost and stockholders’ equity accounts are remeasured at historical exchange rates.
What is revaluation surplus?
A revaluation surplus is an equity account in which is stored any upward changes in the value of capital assets. If a revalued asset is subsequently dispositioned out of a business, any remaining revaluation surplus is credited to the retained earnings account of the entity.
What is the closing rate?
The exchange rate for two currencies at the end of a period of time, such as a trading day or month.
What is the closing rate method?
A method of restating the figures in a balance sheet in another currency using the closing rate of exchange for all assets and liabilities, i.e. the rate of exchange quoted at the close of business on the balance-sheet date.
Is long-term debt a monetary liability?
Cash, short-term loans, and long-term bonds are monetary items.
What is the difference between transaction and translation exposure?
Transaction exposure impacts a forex transaction’s cash flow whereas translation exposure has an impact on the valuation of assets, liabilities etc shown in balance sheet. Any company with international operations has to deal with foreign exchange risk resulting in different positions on cash flows and balance sheet.
How is functional currency determined?
The functional currency is determined by looking at a number of relevant factors. This currency should be the currency in which an entity usually generates and spends cash. All of the transactions which are not in the functional currency are treated as foreign transactions.
What is the difference between AOCI and OCI?
AOCI represents accumulated other comprehensive income and is stated at a point in time. It accumulates all the historical gains and losses that were recorded to OCI. OCI represents current year gains and losses that were not recognized in the income statement.
Does OCI close to retained earnings?
Since the OCI items do not affect the net income, they do not cause a change in a corporation’s retained earnings.
What is the normal balance of OCI?
When is the normal balance of Normal Comprehensive Income (OCI) a credit
