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First time to translate report so need some kind help

assuming functional currency (FC) other reporting currency (RC) period 1 in FC revenue 200 profit 200 receivables 200 cash 0 period 1 in RC ex. rate 1/2 revenue 100 profit 100 receivables 100 cash 0 period 2 in FC ex. rate 1/2 revenue 0 profit 0 receivables 0 cash 200 period 2 in RC ex. rate 1/4 revenue 0 profit 0 receivables 0 cash 50 should I record difference of 50 RC as adjustment in OCI and equity or include in income statements as net loss from rate difference (profit -50 in period 2)?


Topic Expert
Helen Kane
Title: President
Company: Hedge Trackers, LLC
(President, Hedge Trackers, LLC) |

Your example is difficult to follow but the basic concept is
1) if the receivable is denominated in a currency that is NOT the functional currency of the entity holding it, it goes to P&L in period 2
2) the only way it goes to OCI is if the receivable is denominated in functional currency and converts to the same value of functional currency cash and you are just doing a consolidation at month end of your functional books into reporting currency.
3) If you record an FX gain/loss in a foreign entity and are doing a consolidation the FX Gain/Loss survives consolidation.


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