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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The unrecognized section 987 gain or loss for each year is based on the difference between the "owner functional currency net value" of the Section 987 QBU on the last day of the current taxable year and the "owner functional currency net value" on the last day of the preceding taxable year.
New rules were recently introduced in the United Kingdom (U.K.) on the use of a functional currency other than the Pound Sterling (sterling) for calculating taxable income.
At the 2004 International Fiscal Association's Canada Roundtable, CRA opined that, where countries such as Australia and Netherlands permit the use of a non-native currency as the functional currency for tax and other reporting purposes, the non-native currency is an appropriate calculating currency for surplus purposes.
* The new "appropriate exchange rate" for translating a CFC's functional currency into U.S.
Moreover, many companies have foreign branches with the same functional currency as the tax owner; these companies do not file Forms 5471 and thus do not have the systems in place to collect the required data.
A QBU will not be treated as having adopted the euro as its functional currency unless it maintains all its books and records in the euro (Temp.
dollar as their functional currency, and raising the de minimis threshold for filing for dormant companies from $5,000 to $50,000.
A "liquid asset" is defined as an asset (other than functional currency or funds held in bank accounts) held to provide a relatively immediate source of funds to satisfy the trade's or business's liquidity needs.
dollar as their functional currency. E&P is generally calculated in functional currency and dividends (with the exception of subpart F) are translated at the spot rate on the date of payment.
Further, taxpayers hedging assets and liabilities in other than their own functional currency often do so with the expectation of no economic benefit.
dollar as their functional currency. E&P is calculated in functional currency and dividends (with the exception of subpart F) are translated at the spot rate on the date of payment.
IRS personnel have publicly suggested that the looming introduction of the new European currency, the euro, probably should be treated as a change in functional currency and a change in accounting method for qualified business units (QBUs) that convert.
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