What FAS 52?



FASB 52 is a guideline for foreign currency translation issued by the Financial Accounting Standards Board (FASB). You can perform FASB 52 currency translation for a specific rate type and specific ledger account. You must define translation adjustment schemes to link rate types to ledger accounts.

What is the difference between remeasurement and translation?

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.

What is Fctr in accounting?

To put in most simple word possible, FCTR or foreign currency translation reserve is the difference between the translated values of any asset/liability at EOM rate and historical rate.

How do you translate retained earnings?





Retained earnings are translated at the weighted-average rate for the relevant year, with the exception of any components that are identifiable with specific dates, in which case the spot rates for those dates are used.

What is functional amount?

Key Takeaways. A functional currency is the main currency that a company conducts its business. As companies transact in many currencies but report their financial statements in one currency, the foreign currencies have to be translated into the functional currency.

What is the remeasurement process and when is it used?

Remeasurement is the process of re-establishing the value of an item or asset to provide a more accurate financial record of its value. Companies use remeasurement when translating the value of revenues and assets from a foreign subsidiary that is denominated in another currency.

What is remeasurement contract?

A remeasurement contract is where the work is measured and valued against agreed rates. There is therefore no agreement as to a lump sum, but there is agreement as to the basis upon which the work will be valued.

How Fctr is created?





The foreign currency translation reserve contains the accumulated foreign exchange differences from the translation of the financial statements of the Group’s foreign operations that are not considered integral to the operations of the parent company, arising when the Group’s entities are consolidated.

How do you record foreign exchange gain or loss?

To record the foreign exchange transaction gain, the company would debit cash for $105, credit foreign exchange gain for $5, and then credit accounts receivable for $100.

Is bank revaluation Realised or Unrealised?

When you run the revaluation process, the balance in each bank account that is posted in a foreign currency will be revalued. The unrealized gain or loss transactions that are created during the revaluation process are system-generated.

What is translation gain or loss?

Translation risk can lead to what appears to be a financial gain or loss that is not a result of a change in assets, but in the current value of the assets based on exchange rate fluctuations.

What is a current rate?

The current rate method is a standard method of currency translation that utilizes the current market exchange rate. Currency translation is the process of converting the financial results of a parent company’s foreign subsidiaries into its functional currency.



Is FX gain a debit or credit?

Gains are posted as debits to the exchange account with a corresponding credit to your Currency Gain/Loss account.

What is the difference between revaluation and translation?

Hopefully, the difference between translation and revaluation is clear. In a nutshell, I can say converting transaction currency balances to the GL BU currency would be revaluation, and converting base currency balances from one currency to another would be translation (at a very high level).

Where is the remeasurement gain or loss reported in the parent company’s financial statements?

Where is the disposition of a remeasurement gain or loss reported in the parent company’s financial statements? Net income/loss in the income statement.

What is a company’s functional currency?

An entity’s functional currency is the currency of the primary economic environment in which that entity operates. The functional currency can be the dollar or a foreign currency depending on the facts. Normally, it will be the currency of the economic environment in which cash is generated and expended by the entity.

What is the difference between revaluation and translation?

Hopefully, the difference between translation and revaluation is clear. In a nutshell, I can say converting transaction currency balances to the GL BU currency would be revaluation, and converting base currency balances from one currency to another would be translation (at a very high level).



What is the difference between translation and conversion?

1. Conversion is the process of exchanging amounts of one foreign for another. 2. Translation is required at the end of an accounting period when a company still holds assets or liabilities in its statement of financial position which were obtained or incurred in a foreign currency.

What is translation in accounting?

Simply put, translation accounting is the process used to turn foreign functional currency financial statements into U.S. dollar-denominated financial statements for consolidation and reporting purposes.

What is functional currency and reporting currency?

Functional currency is the currency of the primary economic environment in which the entity operates. Reporting currency is the currency in which financial statements are presented. Dependency. Functional currency depends on the currency of the country that the company operates in.

What is functional currency example?

The company chooses euros as the functional currency because it is the local currency. In another circumstance, a Mexican company with most of its operations in the United States would use the U.S. dollar as its functional currency, even if its financial statements are expressed in terms of Mexican pesos.

How is functional currency calculated?

When determining the functional currency of an entity’s foreign operations, consider the following factors:



  1. Autonomy. Whether the operation is essentially an extension of the reporting entity, or it can operate with a significant degree of autonomy. …
  2. Proportion of Transactions. …
  3. Proportion of Cash Flows. …
  4. Debt Service.