How does a parent company determine the appropriate method for translating the financial statements of a foreign subsidiary?
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How does a parent company determine the appropriate method for translating the financial statements of a foreign subsidiary?
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- Identify the unique accounting issues associated with consolidating a foreign subsidiary with the operations of its U.S. parent company.Recognize the particular accounting challenges connected with combining a foreign subsidiary's activities with those of its parent business in the United States.Identify the particular accounting challenges that arise when a foreign subsidiary is consolidated with its parent company's activities in the United States.
- What are the acceptable methods of accounting for business operations in a foreign country? Choose a publicly-traded company that operates internationally and identify the impact that the foreign operations have on the financial statements. Explain.This question is related to (International Accounting) course. Critically discuss the issues associated with the calculation of profit of a foreign subsidiary.Question What causes balance sheet (or translation) exposure to foreign exchange risk? How does balance sheet exposure compare with transaction exposure? In translating a foreign subsidiary's financial statements, what exchange rate should be used for the subsidiary's revenues and expenses? How can a parent corporation determine the functional currency for a foreign subsidiary that conducts business in more than one country? What concept underlies the temporal method of translation? What concept underlies the current rate method of translation? How does balance sheet exposure differ under these two methods? What are the major procedural differences in applying the current rate and temporal methods of translation?
- Which of the following statements is not true under U.S. GAAP?a. Operating segments can be determined by looking at a company’s organization chart.b. Companies must combine individual foreign countries into geographic areas to comply with the geographic area disclosure requirements.c. Companies that define their operating segments by product lines must provide revenue and asset information for the domestic country, for all foreign countries in total, and for each material foreign country.d. Companies must disclose total assets, investment in equity method affiliates, and total expenditures for long-lived assets by operating segment.Do all transactions by U.S. companies with foreign parties require special accounting procedures by the U.S. companies? Explain.Clarke Company has a subsidiary operating in a foreign country. In relation to this subsidiary, what does the term functional currency mean? How is the functional currency determined?
- Choose the correct. Which of the following statements is not true under U.S. GAAP?a. Operating segments can be determined by looking at a company’s organization chart.b. Companies must combine individual foreign countries into geographic areas to comply with the geographic area disclosure requirements. c. Companies that define their operating segments by product lines must provide revenue and asset information for the domestic country, for all foreign countries in total, and for each material foreign country.d. Companies must disclose total assets, investment in equity method affiliates, and total expenditures for long-lived assets by operating segment.Why is it so difficult to estimate the value of retained profits when translating the financial statements of a foreign subsidiary? Normally, how is this issue resolved?What accounting issues arise for a company as a result of engaging in international trade (imports and exports)?