Foreign Currency Translation
SFAS 52, December 1981
“Foreign Currency Translation”
“Foreign Currency Translation”
Translation of foreign currency financial statements
1. All items of financial statements are translated
–> from functional currency to reporting entity
–> using a current exchange rate
–> from functional currency to reporting entity
–> using a current exchange rate
2. For assets and liabilities
–> current exchange rate at the balance sheet date
–> current exchange rate at the balance sheet date
3. For revenue and expenses
–> current exchange rate at the time of recognition
–> or average rate during the period if appropriate
–> current exchange rate at the time of recognition
–> or average rate during the period if appropriate
4. For stockholders’ equity
–> historical exchange rate at the time of transaction
–> historical exchange rate at the time of transaction
Translation adjustments
1. Translation adjustments incur
–> when financial statements are translated
–> from functional currency to reporting currency
–> when financial statements are translated
–> from functional currency to reporting currency
2. Translation adjustments are
–> reported in other comprehensive income
–> reported in other comprehensive income