Flashcards in Foreign Operations Deck (11)
The measurement of an instrument based on the currency in which it will be settled, which is the currency in which it is denominated (received or paid).
Define: Local or Transactional Currency
The currency in which a company maintains its books and records generally its local currency.
Define: Functional Currency
The currency with the greatest economic impact on the company, generally the same as the local or transactional currency.
Define: Reporting (Presentation) Currency
The currency used to prepare an entities financial statements.
The process of converting information from the local currency to the functional when it is also the reporting currency.
Define: Remeasurement Adjustment (Gain or Loss)
Net of all adjustments to financial statement elements as a result of the remeasurement process, recognized in earnings.
The process of converting information from the functional currency, when it is also the local currency, into the reporting currency.
Define: Translation Adjustment (Gain or Loss)
Net of all adjustments to financial statement elements as a result of the translation process, recognized in Other Comprehensive Income (OCI).
Define: Spot Rate
Foreign currency exchange rate on the date of a transaction.
Define: Forward Rate
Foreign currency exchange rate expected to be in effect at some point in the future and at which a forward exchange contract may be entered.