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Flashcards in Foreign Operations Deck (11)
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1

Define: Denomination

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).

2

Define: Local or Transactional Currency

The currency in which a company maintains its books and records generally its local currency.

3

Define: Functional Currency

The currency with the greatest economic impact on the company, generally the same as the local or transactional currency.

4

Define: Reporting (Presentation) Currency

The currency used to prepare an entities financial statements.

5

Define: Remeasurement

The process of converting information from the local currency to the functional when it is also the reporting currency.

6

Define: Remeasurement Adjustment (Gain or Loss)

Net of all adjustments to financial statement elements as a result of the remeasurement process, recognized in earnings.

7

Define: Translation

The process of converting information from the functional currency, when it is also the local currency, into the reporting currency.

8

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).

9

Define: Spot Rate

Foreign currency exchange rate on the date of a transaction.

10

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.

11

Define: Forward Exchange Contract

Agreemtn to exchange a certain amount of foreign currency for U.S. dollars, or some other currency, on a specific date in the future at a predetermined exchange rate.