Section 6 - Foreign Operations Flashcards
What is a transactional currency?
The “local recording currency” of a particular country. Usually the books and records are kept in.
What is a functional currency?
The currency with the greatest economic impact on the entity’s financial performance.
(Currency in which entity generates and expends cash)
What is a reporting currency?
The currency in which the enterprise prepares its financial statements.
Typically US dollars $$$
What is the order of foreign currency remeasurement and translation?
Transactional currency –> Functional currency = Remeasurement (Income Statement)
Functional currency –> Reporting currency = Translation (B/S comprehensive income)
What is a “spot rate”?
The actual exchange rate on a particular date.
What is a “forward rate”?
What the exchange rate is expected to be at some point in the future.
What are the terms for IFRS foreign currency transaction and translation?
Foreign Currency (GAAP is transactional)
Functional Currency
Presentation Currency (GAAP is reporting)
