Foreign operations Flashcards
1
Q
To determine functional currency
A
Primary factors: - Currency influencing sales P - Currency of country whos competitive forces determine - Currency influencing input costs Secondary factors: - currency of financing - where funds are retained
2
Q
2 types of foreign operations
A
- Integrated operations
2. Self sustaining operations
3
Q
Integrated operations
A
Extension of parent. Uses temporal method to translate
4
Q
Self sustaining operations
A
Independent of parent
5
Q
Translate income and expenses
A
on day of trans or average rate if stable
6
Q
Cost of sales
A
When purchases
7
Q
Depreciation
A
Based on historic rate
8
Q
Monetary items on bs
A
Updated to closing rate on BS date
9
Q
Non Monetary
A
At their historical rate
10
Q
R/E
A
Opening - from prior
+ NI per above (avg)
- Dividends - translated on date of declaration
11
Q
Gain/ loss on foreign exchange
A
Opening net assets - p/y closing
+ ni
- dividends
= closing net assets ( calculated)
Provided closing net assets x closing rate = translated position
Translated - calculated = gain/loss
