Suzie's No 2 Assignment

QUESTION #2 ANSWERS: 1. The objectives of translating a foreign subsidiary’s financial statements are to: •

Provide information that is commonly compatible with the expected

economic effects

of a rate

change

on a

subsidiary’s cashflow and equity. •

Presents the subsidiary’s financial results and relationships in a single currency consolidated financial statements, as measured in its functional currency in conformity with GAAP (Generally Accepted Accounting Procedures)

2. When different exchange rates are applied to different financial

statement accounts, the restated statements are usually unbalanced. The amount required to balance the statements is called the gain or loss from translation or remeasurement. The gain or loss resulting from remeasuring Key of Austria’s financial statements is reported in the consolidated income statement. The gain or loss arising from translating Key of France’s financial statements is reported in the balance sheet in other comprehensive income. 3. Current exchange rate should be used to consolidate each subsidiary’s equipment cost, accumulated depreciation and depreciation expense.