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Title: Advanced Accounting: Foreign Currency Translation
Description: Summary for Foreign Currency Translation
Description: Summary for Foreign Currency Translation
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Closing Rate Approach
(Functional to Presentation)
Asset/Liabilities = Closing Rate
Equity:
Share Capital/Share Premium @ Historical rate
RE Beg @ Prior Year Translation Rate
Dividends declared @ Spot at Declaration
NI/(NL) @ Translation date rate or Average rate
RE End
xx
xx
(xx)
xx/(xx)
xx
Forex Differences = OCI, reclassifiable to P/L
Temporal Approach
(Forex to Functional)
Monetary Asset/Liabilities = Closing rate
Nonmonetary Asset/Liabilities = Historical rate
Equity:
Share Capital/Share Premium @ Historical rate
RE Beg @ Prior Year Translation Rate
Dividends declared @ Spot at Declaration
NI/(NL) :
If Monetary: @ Translation date rate or Average rate
If Nonmonetary @ Historical rate
RE End
xx
xx
(xx)
xx/(xx)
xx/(xx)
xx
Forex Differences = Profit/Loss
Net Asset per Rollforward > Net Asset Per Closing = Loss
Net Asset per Rollforward < Net Asset Per Closing = Gain
Cumulative Translation Adjustment = Equity
Current Year Translation Adjustment = OCI
*If Hedge item is an investment in foreign operations and entered into a hedge activity to migrate
the risk related to that operation, the hedging activity is accounted for as Cashflow Hedge
Title: Advanced Accounting: Foreign Currency Translation
Description: Summary for Foreign Currency Translation
Description: Summary for Foreign Currency Translation