I know you guys have this conversation before but want to make sure. For GAAP we do not separate anymore current and noncurrent deferred tax – everything is noncurrent, correct? So now is like IFRS noncurrent also. Am I right? Thanks
Could someone please ELI5 the “foreign currency = local currency” and “functional currency = reporting currency” meanings? Or point me in the direction of an old thread. (I did attempt to search). I cannot make sense of the explanations I am finding.
@Trevor- functional currency is the currency in which the entity conducts most of its business. Typically this is the local currency- so For example I am a US corporation with a branch in London- The branch conducts most of its business in the British pound= so that would be their functional currency / i.e. the local currency. When I issue my financial statements I issue them in US dollars- so this is the reporting currency. So the functional currency will need to be converted into us dollars so I can accurately report it. Hope that helps!
and they ask me why I drink...
FAR- 61-next time I'll ask for lube instead of a calculator
REG-75- Never been so happy to see such a low grade
BEC- 8/11
AUD- 9/2
Oh and to further complicate matters- you will sometimes have transactions that occur in a local currency other than the functional one. So lets go back to the example above. Lets say my London Branch does business the majority of their business with France whose local Currency is the Euro. So London will have to remeasure the Euro into pounds- then translate the pounds into dollars. So you are going from local currency to functional currency to reporting currency.
and they ask me why I drink...
FAR- 61-next time I'll ask for lube instead of a calculator
REG-75- Never been so happy to see such a low grade
BEC- 8/11
AUD- 9/2
@mckan514w Thank you very much for the explanation. Your continued example in the second post is what I was not understanding before. “Remeasure” is going from functional to local currency, and “Translate” is from the functional currency to the reporting currency… So if the functional currency = local currency, no remeasuring occurs, correct?
@trevor correct… (with the caveat that you remeasure is going from local to functional not functional to local)- if local=functional then no remeasurement if local is not the same as functional then you remeasure.
and they ask me why I drink...
FAR- 61-next time I'll ask for lube instead of a calculator
REG-75- Never been so happy to see such a low grade
BEC- 8/11
AUD- 9/2
@mckan514w Got it. Thank you for clarifying… It looks like you are done after passing FAR as well. Good to know I wasn't the only one crazy enough to save the big one for last! Not sure when you are testing, but I am 2 weeks out. Good luck to you!
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