USA Questions about accounting for foreign transactions

Sep 15, 2016
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United States
I will try to keep this as short and succinct as possible. I am working on the books for a company that has activity in USD and PLN (there is also activity in EUR but that isn’t an issue). Everything is maintained in QuickBooks in the transaction currency and then exported to excel at which time everything is converted into USD. I have been provided exchange rates to use for the 1Q16 and 2Q16 for both the income statement and balance sheet. The income statement is simple since it only involves using the rate provided to convert into USD. The balance sheet has a large interest receivable and loan receivable balance denominated in PLN that also presents no problems as I simply use the balance sheet rate provided. My issues are all with the equity section.

This company has a large amount of contributed capital denominated in PLN and USD. I have converted the PLN piece into USD using the same rate that I used for the intercompany loan receivable since that is how it was done when the 2014 and 2015 financial statements were prepared but I am not sure that is correct. The company was formed, and the contribution made, in December 2013 so wouldn’t it be correct to use the historical rate that was used for the 12/31/13 balance sheet?

As of 12/31/15 the retained earnings balance was broken out between USD and PLN and converted into USD and the same was done with the net income for 2015. To calculate retained earnings as of 3/31/16 in USD do I use the 12/31/15 retained earnings amount plus the 2015 net income amounts from the 12/31/15 balance sheet or do I need to convert the PLN piece of retained earnings and net income using the 1Q16 balance sheet rate?

When I convert the net income on the income statement into USD do I use this same amount for the net income on the balance sheet or do I have to convert the net income on the balance sheet using the balance sheet rate? I know that probably sounds like a stupid question to most but I the prior financial statements I have use different rates for the income between the statements.

I also have a question about the other comprehensive income amount but I will save that for later.

If anybody can assist me I would greatly appreciate it.

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