Functional currency


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Functional currency

As defined by FASB No. 52, an affiliate's functional currency is the currency of the primary economic environment in which the affiliate generates and expends cash.
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Earnings improved compared with the third quarter of 2016 due to higher realized prices, reduced depreciation expense, lower exploration expense, impacts from dispositions as well as the absence of special item impacts from a tax functional currency change at APLNG and restructuring costs.
Reportedly, SRV's functional currency in Russia was mainly the euro until September 2016.
Taxpayers historically computed the taxable income of a non-functional currency section 987 QBU by taking the QBU's functional currency trial balance and making appropriate tax adjustments to conform the balance to U.
Due to the size of Aflac Japan, where the functional currency is the Japanese yen, fluctuations in the yen/dollar exchange rate can have a significant effect on reported results.
Ordinary income and net income attributable to owners of the parent increase 733 million yen and 739 million yen, respectively, due to the improvement in non-operating income following the retroactive amendment to the change in functional currency at overseas subsidiaries.
The company said the increase in net loss in the second quarter 2016 was primarily due to the increase in research and development expenses, net, which were partially offset by a decrease in financial expenses as a result of a change in its functional currency, from New Israel Shekel to the US dollar, effective 1 January 2016.
Further, the subsidiary VSS A/S has from 1 January 2016 changed its functional currency from NOK to USD.
985(b)(1)(A) states the general rule that the functional currency for tax purposes will be the dollar.
One area companies are looking at is translation risk, which involves the effect of foreign exchange movements on a company's balance sheet as foreign business units' financials are translated into the parent company's functional currency.
MBJA uses the US dollar as its functional currency and its financials are prepared in accordance with International Financial Reporting Standards.
Next, the accounts that are not denominated in the functional currency should be remeasured into the functional currency, and the result of the remeasurement should be reflected in earnings.
Normal intercompany accounts will generate a gain or loss that is ordinarily reflected on the books of the subsidiary operating in a functional currency other than the reporting currency of the parent company.
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