CPAnet Forum: Quick Question on Foreign Currency

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iheartpeter
Major Contributor

Joined: 17 Mar 2009
Location: United States
Online Status: Offline
Posts: 274

Posted: 02 Apr 2010 at 16:52 \| IP Logged

Just received this explanation for one of my Wiley foreign currency questions.

"SFAS 52 requires remeasurement when the US dollar is the functional currency."

So...what? Is that correct? I didn't know that....but wait, I just realized that if a FOREIGN company's currency is stated in the U.S. dollar than that means their statements are not using their own local currency which does require remeasurement...

is that right? did I figure that out correctly? This foreign exchange stuff totally confuses me...

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Carrie...On The Cheap

lululene
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Joined: 26 Mar 2010
Location: United States
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Posts: 138

Posted: 08 Apr 2010 at 10:58 \| IP Logged

My understanding is first the functional currency has to be determined. The process from local currency to functional currency is called remeasurement. If U.S. dollor is the functional currency, then no translation is necessary. If functional currency is currency other than U.S. dollor, then the translation from functional currency to U.S. dollor is needed.

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