foreign currency translation

Foreign currency translation

The process of restating foreign currency accounts of subsidiaries into the reporting currency of the parent company in order to prepare consolidated financial statements.

Foreign Currency Translation

When a parent-subsidiary relationship exists between two companies in different countries using different currencies, the act or practice of changing the financial statements of the subsidiary to conform to the accounting standards of the parent's country, as well as re-denominating the subsidiary's currency into the parent's currency. According to the Generally Accepted Accounting Principles in the United States, the translation of a foreign currency to U.S. dollars must be accurate as of the date on the financial statement. If there have been substantial changes to the exchange rate since that date, the consolidated financial statement must note this.

foreign currency translation

foreign currency translation

the process of denoting the assets and liabilities of a MULTINATIONAL ENTERPRISE'S foreign subsidiary's BALANCE SHEET and the revenues and expenses of the subsidiary's PROFIT-AND-LOSS ACCOUNT, which are expressed in terms of the subsidiary's local currency by translating them into the parent company's domestic currency. This is done in order to prepare CONSOLIDATED ACCOUNTS for the group.

There are two main currency translation methods:

  1. the closing rate, or net investment method, or all-current method, in which all foreign currency items are translated at the EXCHANGE RATE ruling at the date of the balance sheet. With the closing rate method any gains or losses on exchange arising from translation are taken direct to the group balance sheet an dealt with as changes in RESERVES so as not to affect reported PROFIT.
  2. temporal method or current/non-current method, in which fixed assets and long-term liabilities are translated at the exchange rate ruling at the date of their acquisition, and revenues and expenses at an average exchange rate for the year. With the temporal method any differences arising on translation are taken to the profit-and-loss account where they serve to affect recorded profit.
References in periodicals archive ?
The company provided the following key planning assumptions for continuing operations: Medical Device sales are expected to increase 4%-6%, on a constant currency basis; expects the foreign currency translation impact to be even compared to the prior year; the adjusted effective tax rate is anticipated to be between 25%-27%, as the company anticipates the new U.
The company said the 2% decrease over the prior year quarter was largely the result of a 3% decrease due to foreign currency translation impact and a 1% decrease in organic volume, partially offset by a 1% increase each from pricing and acquisitions.
Foreign currency translation had a significant impact on the fourth quarter results, reducing reported revenue by 6.
It slipped into a loss during the third quarter, of 88,369 dinars set off by foreign currency translation adjustments.
The year-over-year increase of five percent (seven percent on a constant-currency basis) was driven primarily by growth in property, insurance, international and underwriting solutions which was partially offset by adverse foreign currency translation impacts and lower project-related volumes.
2 million of unfavorable foreign currency translation and a 4.
As previously disclosed, RBC will record a further loss on sale of its operations of approximately C$37 million before and after tax, which includes an unrealized loss on foreign currency translation (C$45 million as at April 30, 2014).
Foreign currency translation, and hedges at Pratt & Whitney Canada, had an adverse impact of $0.
Unfavorable unit volume and foreign currency translation reduced sales by $174 million and $49 million, respectively.
Sales also benefited from strong price/mix improvements, which drove revenue per tire up 15 percent over the 2010 quarter, excluding the impact of foreign currency translation.
Foreign currency translation did not impact EPS in the quarter.

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