TRANSLATION
Foreign currency
translation is used
to convert the
result of a
parent company's
foreign subsidiary
to its reporting
currency
3 STEPS
Determine the functional
currency of the foreign currency
Remeasure the financial statement of
the foreign entity into the reporting
currency of the parent company
Record gains and loses on the
translation of currencies
CURRENT RATE
METHOD
translation into the presentation
currency (translation from the
functional currency to
presentation currency
most items of the financial
statements are translated AT
THE CURRENT EXCHANGE RATE.
The assets of the business are
translated at the current
exchange rate.
TEMPORAL RATE
METHOD
functional currency is the
Philippine Peso (translation into
functional currency)
is applied to adjust income
generating assets on the balance
sheet and related income
statement items usig historical
exchange rates from transaction
dates.
ADDITIONAL
NOTE
if silent use current rate method
Asset & Liab - Closing rate
Net income - Average rate
CS and APIC - historical rate
Retained earnings
1. Beginning
2. Net income
3. Dividend