Foreign Operation

Functional currency	Transaction	Reporting
Local currency	Current rate method Assets,Liabilities=>CR Equity accounts =>HR Revenue,Expenses=>WAR	Other Comprehensive Income
US $	Remeasurement Monetary Assets,Liab.=>CR Nonmonetary Assets,Liab.=>HR Equity Accounts => HR Revenue,Expenses[B/S]=>HR Revenue,Expenses[other]=>WAR Revenue,Expenses=>WAR	Consolidated Income Statement

• Transaction of Foreign Currency Financial Statements
• Remeasurement into Functional Currency
• Foreign Currency Transaction

  		[Dr]Purchase		##,###
  				[Cr]Account Payable	##,###
  		
  
  		[Dr]Account Payable	##,###
  				[Cr]Foreign currency transaction gain##,###
  		
  
  		[Dr]Account Payable	##,###
  		[Dr]Foreign currency transaction loss##,###
  				[Cr]Cash		##,###
  		

• Foward Exchange Contract
  Future rate - Spot rate
  • contract to sell currency

    Discount

  • contract to buy currency

    Premium

  • Hedge against exposed net assets or net liabilities position

    		[Dr]Yen Due From Broker			##,###(Spot)
    		[Dr]Deferred Foward Contract Cost	##,###
    				[Cr]Payable to Broker		##,###
    							      (Forward)
    		
    
    
    		[Dr]Yen Due From Broker			##,###
    				[Cr]Exchange Gain		##,###
    		
    
    		[Dr]Foward Contract Expenses		##,###
    				[Cr]Deferred Foward Contract Cost ##,###
    
    		
    
    
    		[Dr]Payable to Broker			##,###
    		[Dr]Investment in Yen			##,###
    				[Cr]Yen Due From Broker		##,###
    				[Cr]Cash			##,###
    				[Cr]Exchange Gain		##,###
    		

  • Speculation

    Valuation=>Forward rate

• Transaction Gains/Lossses