Question: In translating the financial statements of a foreign subsidiary why
In translating the financial statements of a foreign subsidiary, why is the value assigned to retained earnings especially difficult to determine? How is this problem normally resolved?
Answer to relevant QuestionsWhat are the major procedural differences in applying the current rate and temporal methods of translation?Which translation method does U.S. GAAP require for operations in highly inflationary countries? What is the rationale for mandating use of this method?The foreign currency is the functional currency for a foreign subsidiary. At what exchange rate should each of the following accounts be translated?a. Rent Expense.b. Dividends Paid.c. Equipment.d. Notes Payable.e. Sales.f. ...Lancer, Inc., starts a subsidiary in a foreign country on January 1, 2010. The following account balances for the year ending December 31, 2011, are stated in kanquo (KQ), the local currency:Sales . . . . . . . . . . . . . . ...Lynch Corporation has a wholly owned subsidiary in Mexico (Lynmex) with two distinct and unrelated lines of business. Lynmex's Small Appliance Division manufactures small household appliances such as toasters and ...
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