@CPAIN2K17 sharing my notes ,not sure if it will make sense to others.
A translation is used whenever a foreign subsidiary is being consolidated with a US parent. All assets and liabilities are initially recorded at the exchange rate in effect when created. They are then updated to the new exchange rate when financial statements are to be produced.
A remeasurement is used whenever a company has individual transactions in a foreign currency. All assets and liabilities are initially recorded at the exchange rate in effect when created. After that, all monetary assets and liabilities (Note :All recorded but only Monetary A and L ,cash, balances to be paid or received in cash, and accounts at fair value are adjusted based on new exchange rates. )
In a remeasurement, only monetary assets and liabilities (as well as any balance reported at fair value) are adhusted at the current exchange rate. Non Monetory items are reported at Historical exchange rate ( the day transaction happened)
Inventory ,FA is not a monetary asset so historical exchange rate remains appropriate.
Translation : All AL at current rate ( twice ,one at the date and another at BS date )
Remeasurement :Monetary at current and Non monetary at historical rate.
If Holding co and subsidiary both has same functional currency ,just remeasurement only no translation.( you don’t translate from same currency ).
A company's functional currency is the one primarily used in its cash flows. When a company operates in more than one currency, it should look at the currency in which it makes most of its sales, obtains most of its financing, pays most of its employees, and buys most of its materials to determine the functional currency.
Again scholars ,whenever a single transaction outside of the functional currency of the reporting entity, a remeasurement is appropriate.
Courtesy Tim Gearty.
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