What is foreign currency remeasurement?
Remeasurement focuses on converting foreign currencies into the subsidiary’s functional currency. Remeasurement is shown in step #1 in the visual below. A subsidiary would likely transact in multiple different currencies with 3rd party customers. However, the subsidiary needs to report in one currency, so it would remeasure its financials to present them in the functional currency.
Remeasurement should be performed for each reporting period. Most large companies remeasure on a monthly, quarterly, or annual basis. Any gains or losses from remeasurement are reported directly on the income statement in the period.
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What is the difference between foreign currency remeasurement and translation?
Remeasurement focuses on converting foreign currencies into the subsidiary’s functional currency. Translation focuses on converting the functional currency for a subsidiary into the reporting currency for the parent company. The visual below outlines where gains and losses for each activity are reported in the financial statements.
What is the difference between foreign currency remeasurement and translation?
Remeasurement focuses on converting foreign currencies into the subsidiary’s functional currency. Translation focuses on converting the functional currency for a subsidiary into the reporting currency for the parent company. The visual below outlines where gains and losses for each activity are reported in the financial statements.
