Analysis of flexible budgets and standard costs emphasizes the importance of a similar unit of measure for meaningful comparisons and evaluations. When Best Buy compiles its financial reports in compliance with GAAP, it applies the same unit of measurement, U.S. dollars, for most measures of business operations. One issue for Best Buy is how best to adjust account values for its subsidiaries that compile financial reports in currencies other than the U.S. dollar.

Required
1. Read Best Buy’s Note 1 in Appendix A and identify the financial statement where it reports the annual adjustment for foreign currency translation.
2. Record the annual amount of its foreign currency translation adjustment for the fiscal years 2005 through 2007.
Fast Forward
3. Access Best Buy’s financial statements for a fiscal year ending after March 3, 2007, from either its Website [BestBuy.com] or the SEC’s EDGAR database [www.SEC.gov]. (a) Identify its foreign currency translation adjustment.
(b) Does this adjustment increase or decrease net income? Explain.