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Chapter 12: FX Translation Methods and Adjustments

In this section

  • Current Rate Method: Mechanics
    Learn how to apply the current rate method when translating foreign subsidiary financials, handle equity translations at historical rates, and record cumulative translation adjustments (CTA).
  • Temporal Method: Mechanics
    Explore the foundation and application of the temporal (remeasurement) method in foreign currency translation, focusing on monetary vs. non-monetary remeasurement and its immediate impact on net income.
  • Hyperinflationary Economies: IFRS vs. US GAAP
    Explore how IFRS and US GAAP treat hyperinflationary economies, focusing on restatement vs. remeasurement, comparative statements, and real-world examples of extreme inflation.
  • Vignette: Determining Correct Method and CTA
    Learn how to identify the correct FX translation method for multinational subsidiaries and properly compute the Cumulative Translation Adjustment (CTA). This comprehensive guide covers functional currency determination, hyperinflationary considerations, and practical examples of current rate and temporal methods.
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Chapter 11: Multinational Operations—FX Basics
Chapter 13: Bridging FX Translation to Consolidation