Dale –
Good question. I did a quick google search and guess what? The first link was from another71. So someone had asked this question and here is the response. Credit to them!
“Translate
Your subsidiary transact in Euros and records in subsidiary records – this is functional currency. The reporting currency is US Dollars on the parent. To get from Euros to USD you “translate” and plug OCI for the out of balance equity difference. You hit OCI as the gain/loss is a fair value type adjustment (think of of AFS securities hitting OCI).
Remeasurement
If, as a subsidiary, you buy and sell in United States Dollars, but keep your book in Euros, your functional currency is US dollars, not Euros. As such, you would re-measure your books from Euros to U.S. Dollars, the functional currency. You're net plug goes to the income statement because you were transacting in the United States Dollar all along.
Remeasurment + Translation.
You are a subsidiary transacting in Euros, but keeping your books and records in Pesos. Your reporting currency of the parent is USD. To get to your functional currency, you re-measure from Pesos to Euros. Then you translate from Euros to Dollars.
Think that sums it up.”
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