FOREX Flashcards
(15 cards)
What are the 3 steps in FOREX transaction?
- Convert to direct quotation
- Determine if import or export
- Record transaction
Direct Quotation → 1 Dollar = 50 pesos
Yes
It’s Showtime
Eat Bulaga
Import (AP) → Selling Rate
Export (AR) → Buying Rate
Ordering Date
- journal entry if import
- journal entry if export
Import
- no entry yet
Export
- no entry yet
What rate to use?
- transaction date
- balance sheet date
- settlement date
Transaction - spot rate
Balance Sheet - closing rate
Settlement - spot rate
NOTE : notice that sales or purchases → not remeasured
What are the 3 steps in FOREX translation?
not hyperinflationary
- Determine if closing method or temporal method
- Determine if monetary or nonmonetary
If branch is independent of HO, use temporal method. True or False?
If functional currency = presentation currency, use closing method. True or False?
DC and TT
False, False
- InDependent = Closing Method
FC → PC
- InTegral = Temporal Method
FC = PC
Where does G/L of closing method go? if temporal method?
Closing Method = OCI
Temporal = P/L
HAVE RIGHT TO RECEIVE / PAY FIXED CURRENCY?
- Yes → Monetary (AR/AP, prepaid interest, FA at AC)
✗ → other prepaid
- No → Non Monetary
Yes
What rate to use in translating (Closing vs Temporal)
- monetary asset / liabilities
whether closing or temporal
- Closing rate
What rate to use in translating (Closing vs Temporal)
- non monetary asset / liabilities @ historical cost
- non monetary asset / liabilities @ fair value
Closing - Closing rate, Closing rate
Temporal - Historical rate, Closing rate
What rate to use in translating (Closing vs Temporal)
- equity
- net income
- dividends
whether closing or temporal
- Historical rate
- Historical rate (average rate → for practicality)
- Historical rate
HYPERINFLATION
- keep wealth in non monetary asset or stable foreign currency
- LCU → immediately invested
- cumulative inflation in 3 years → more than 100%
Yes
Restate and Translate Method
Restate
- will result to G/L on net monetary position
- what items are restated? how?
- monetary items → do not restate
- non monetary items → restate using the formula
item x (GPI - Current / GPI - Applicable)
Revaluation Surplus → eliminated
Restate and Translate Method
Translate
- Assets, Liabilities, Equity → use closing rate
- different to closing method
Yes
