11/21 Chapter 12 & 11 Flashcards Preview

ACCT 5130 > 11/21 Chapter 12 & 11 > Flashcards

Flashcards in 11/21 Chapter 12 & 11 Deck (28):
1

11-8

a. 475000*.176 = 83600-73600=10000 gain
21000000*.0081=170100-175300=5200 gain
A/R Egyptian Pounds 10000
Gain on FCT 10000
A/P Yen 11500
Gain on FCT 11500
b. 475000*.18=85500-83600=1900
A/R EL 1900
Foreign Currency Trans Gain 1900
Collection
Cash 164000
Foreign Currency 85500
A/R EL 85500
A/R $ 164000
c. .0078*21000000=163800-170800=7000
e. Dec 31 2006 5200 gain
Dec 31 2007 6300 gain
Overall gain 11500
f gain on EL 11900
gain on Yen11500

2

Ch 12

learn

3

International Financial Reporting Standards

we are moving towards converging IFRS and GAAP

4

Effective cash flow hedges

go through OCI

5

current rate

spot rate date of the balance sheet

6

historical rate

rate on the date the assets was required

7

average rate for the period

we should add all of the months and get an average to get an accurate average

8

functional currency

primary currency of the company, when changed you do it prospectively.

9

factors indicating functional currency

look at pg 618

10

expense indicators

if we are manufacturing things in a foreign currency, more than likely it is our functional currency, unless we bring all of the other things from other countries

11

highly inflationary economies

if the currency is unstable then the functional currency is in US dollars

12

Remeasure

we have to remeasure our books to make it in US Dollars, most people don't do this they keep it in the functional currency then if they need to report to the foreign gov then they translate back to the foreign currency

13

Translate

when going from a reporting to functional we have to remeasure the reporting currency to get to the functional currency. then we translate to the US dollar

14

current rate

used to convert local currency asset and liability accounts into US dollars

15

historical rate

used to convert equity accounts into US dollars

16

average rate

revenues and expenses are translated using the average rate for the reporting period

17

any translation adjustment is a component of

Comprehensive Income

18

temporal method

remeasurement

19

current method

translation

20

LC = FC

translate to US dollars

21

if LC not = FC

remeasure to FC

22

if FC = US

no work

23

if FC not = US dollars

translate

24

12-5 translation

assets and liab at the current rate
revenue and exp at the avg rate
equity items at their historical
dividends use the rate at which they were declared
translation adjustment helps it balance it goes through OCi

25

remeasurement

monetary - current
nonmonetary -historical rate
rev and exp -avg rate for items related to monetary items, historical rates for inc statement items related to nonmonetary items
any imbalance flows through the income statement as a remeasurement gain or loss
RE 1/1 mixed
net income avg
dividends historical
RE 12/31

26

translation

we like it

27

go through the exercise on slide 27 translation

do it

28

remeasurement

on test he will ask general questions on remeasurement, you have to know how to translate