GAAP Policies and Procedures, Second Edition

Chapter 16. Foreign Currency

Definitions of Terms			383
Concepts and Examples			384
	The Current Rate Method		384
	The Remeasurement Method		386
	Translation of Foreign Currency Transactions		388
	Exchange Rates Used for Calculations		389
	Intercompany Transactions		389
Decision Trees			390
Policies			390
	Translation of Foreign Currency Financial Statements		390
	Translation of Foreign Currency Transactions		391
Procedures			391
	Financial Statement Translation—Highly Inflationary Economy Determination		391
	Application of the Current Rate Method		391
	Application of the Remeasurement Method		392
	Translation of Foreign Currency Transactions		392
Controls			393
	Translation of Foreign Currency Financial Statements		393
	Translation of Foreign Currency Transactions		393
Forms and Reports			394
	Translation of Foreign Currency Financial Statements		394
Footnotes			394
Journal Entries			395
	Translation of Foreign Currency Financial Statements		395
		Financial statement translation adjustment	395
	Translation of Foreign Currency Transactions		395
		Translation of foreign currency transactions	395
		Recognition of the sale of a foreign subsidiary	396
Recordkeeping			396

Definitions of Terms

 

conversion

Using an exchange ratio to switch from one currency to another.

current exchange rate

The respective valuations of two currencies, resulting in a rate at which one currency can be exchanged for the other.

foreign currency

Any currency other than the one a company designates as the functional currency of its corporate parent.

foreign currency transaction

A transaction using a currency ...