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U.S. GAAP Codification Accounting Topics



U.S. GAAP
Financial Reporting Guide



Principles of AccountingU.S. GAAP Financial Reporting Guide
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Section 8200: Foreign Currency

[U.S. GAAP Codification Topic]
830 Foreign currency matters
830-10 Overall
830-20 Foreign currency transactions
830-30 Translation of financial statements

[U.S. GAAP before the Codification]
SFAS 52, December 1981, Foreign Currency Translation

1. Functional currency
(1) Functional currency
--> the currency of the primary economic environment
--> of the entity
(2) Accounting transactions are measured and recorded in functional currency

2. Reporting currency
Reporting currency
--> the currency used to report financial statements

3. Translation
If reporting currency is not functional currency
--> all items reported in financial statements are
--> translated from functional currency to reporting currency

4. Remeasurement
(1) If accounting transactions are recorded in local currency that is not functional currency
--> remeasure accounting records from local currency to functional currency
--> then translate from functional currency to reporting currency

(2) Accounting records after remeasurement
--> will be same as (a)
(a) accounting records when all transactions were recorded in functional currency

5. Exchange rate for remeasurement
(1) For nonmonetary accounts
--> use historical rates between local currency and functional currency
(2) For revenue and expenses resulted from nonmonetary accounts
--> use historical rates between local currency and functional currency
(3) For monetary accounts
--> use current rate between local currency and functional currency
(4) Foreign currency transaction gains and losses are also recognized

6. Foreign currency transaction gains and losses are
--> recognized in income
--> with some exceptions
--> as explained in the Codification Topic 830-20

7. Foreign currency translation adjustments are
--> reported in other comprehensive income (OCI)
--> as explained in the Codification Topic 830-30

8. Changes in functional currency
When functional currency changes
--> previous financial statements are not restated

9. Foreign currency transactions
Foreign currency transaction
--> transactions denominated in the currency other than functional currency

10. Recognition of foreign currency transactions
Foreign currency transactions are recorded
--> in functional currency
--> using the exchange rate at the transaction date

11. Foreign currency transaction gains and losses
Gains and losses due to the changes in exchange rates between (A) and (B)
(A) transaction date
(B) settlement date

12. An example
US dollar is functional currency
Transaction is denominated in Euro

November 1, 20x1 when €1 = $ 1.40
Sold 200 units of products at €10 per unit.

Accounts receivable $2,800
Sales $2,800

December 15, 20x1 when €1 = $ 1.45
Collected €2000

Cash $2,900
Accounts receivable $2,800
Foreign currency transaction gain $100

13. Foreign currency transaction gains and losses are
--> recognized in income
--> except for the cases listed in (C), (D) and (E)
(C) foreign currency transactions
--> designated as hedges of a net investment in foreign operations
--> gains and losses are reported in other comprehensive income (OCI)
(D) intra-entity foreign currency transactions
--> with long-term investment nature
--> such transactions are considered as part of the net investment
(E) changes in fair value of available for sale debt securities
--> in foreign currency are
--> reported in other comprehensive income (OCI)

14. Translation of foreign currency financial statements
(1) All items of financial statements are translated
--> from functional currency to reporting entity
--> using a current exchange rate
(2) For assets and liabilities
--> current exchange rate at the balance sheet date
(3) For revenue and expenses
--> current exchange rate at the time of recognition
--> or average rate during the period if appropriate
(4) For stockholders' equity
--> historical exchange rate at the time of transaction

15. Translation adjustments
(1) Translation adjustments incur
--> when financial statements are translated
--> from functional currency to reporting currency
(2) Translation adjustments are
--> reported in other comprehensive income




Index of U.S. GAAP Financial Reporting Guide


U.S. GAAP by Codification Topics 
 
 105  GAAP Hierarchy 
 105  GAAP History 

 205  Presentation of Financial Statements 
 205-20 Discontinued Operations 
 210  Balance Sheet 
 210-20 Offsetting 
 220  Comprehensive Income 
 225  Income Statement 
 225-20 Extraordinary and Unusual Items 
 230  Statement of Cash Flows 
 250  Accounting Changes and Error Corrections 
 260  Earnings per Share 
 270  Interim Reporting
 
 310  Impairment of a Loan
 320  Investment Securities 
 320  Other-Than-Temporary Impairments, FSP FAS 115-2 
 320-10-05 Overview of Investments in Other Entities 
 320-10-35 Reclassification of Investments in Securities
 323-10 Equity Method Investments
 323-30 Investments in Partnerships and Joint Ventures 
 325-20 Cost Method Investments 
 330  Inventory

 340-20 Capitalized Advertising Costs 
 350-20 Goodwill 
 350-30 Intangibles Other than Goodwill 
 350-40 Internal-Use Software 
 350-50 Website Development Costs 
 360  Property, Plant and Equipment
 360-20 Real Estate Sales


 410  Asset Retirement and Environmental Obligations 
 420  Exit or Disposal Cost Obligations 
 450  Contingencies 
 450-20 Loss Contingencies 
 450-30 Gain Contingencies
 480  Redeemable Financial Instruments 

 505-20 Stock Dividends, Stock Splits 
 505-30 Treasury Stock 

 605  SEC Staff Accounting Bulletin, Topic 13 
 605-25 Revenue Recognition - Multiple Element Arrangements 
 
 715-30 Defined Benefit Plans - Pension
 718  Share-Based Payment 
 730  Research and Development 
 730-20 Research and Development Arrangements 

 805  Business Combinations  
 810  Consolidation 
 810  Noncontrolling Interests 
 810  Consolidation of Variable Interest Entities, SFAS 167 
 
 815  Derivatives and Hedging Overview 

 820  Fair Value Measurements  
 820  Fair value when the markets are not active, FSP FAS 157-4
 825  Fair Value Option 

 830  Foreign Currency Matters 
 830-20 Foreign Currency Transactions 
 830-30 Translation of Financial Statements 
 835  Interest 
 835-20 Capitalization of Interest 
 835-30 Imputation of Interest 

 840  Leases 
 840-20 Operating Leases 
 840-30 Capital Leases 
 840-40 Sale-Leaseback Transactions
 845  Nonmonetary Transactions 

 855  Subsequent Events 
 860-20 Sale of Financial Assets, SFAS 166 
 860-50 Servicing Assets and Liabilities, SFAS 156 

 985-20 Costs of software to be sold  


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