USA Foreign Subs and Consolidation

AGH the CPA

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When consolidating a wholly owned foreign sub, and you are asked to use the current exchange rate, is it TODAYS current rate or is it the current exchange rate at the end of the period in question?
 

Fidget

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That's the 'spot' rate, which is correct to use at the time of transactions. But when drawing up the consolidation at the end of the period it's the exchange rate at the end of the period to do the re-translation of payables/receiveables.

That's under IFRS. I can't vouch for other standards being the same.
 

kirby

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For US, FASB 52 still controls, of course. There should have been a determination of the functional currency to be used. Then translation, yes, uses current rate at balance sheet date for balance sheet accounts except for accounts that MUST use a historical rate. Example - Fixed assets. Cannot use current rate as then a given building would illogically increase and decrease each period in translation process if current rates were used for all accounts.

Don't forget - average rates for income stmt aqccounts.
 

Drmdcpa

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It also matters if the exchange rate between the two currencies is highly volatile or not. If not, the difference between times throughout the year would be immaterial.
 

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