Learning Outcome Statements

1. Effects of exchange rate changes

b. describe foreign currency transaction exposure, including accounting for and disclosures about foreign currency transaction gains and losses;

c. analyze how changes in exchange rates affect the translated sales of the subsidiary and parent company;

2. Role of the functional currency

a. distinguish among presentation (reporting) currency, functional currency, and local currency;

3. Remeasurement: the temporal method

d. compare the current rate method and the temporal method, evaluate how each affects the parent company's balance sheet and income statement, and determine which method is appropriate in various scenarios;

e. calculate the translation effects and evaluate the translation of a subsidiary's balance sheet and income statement into the parent company's presentation currency;

4. Translation: the all-current method

d. compare the current rate method and the temporal method, evaluate how each affects the parent company's balance sheet and income statement, and determine which method is appropriate in various scenarios;

e. calculate the translation effects and evaluate the translation of a subsidiary's balance sheet and income statement into the parent company's presentation currency;

5. Remeasurement versus translation

d. compare the current rate method and the temporal method, evaluate how each affects the parent company's balance sheet and income statement, and determine which method is appropriate in various scenarios;

e. calculate the translation effects and evaluate the translation of a subsidiary's balance sheet and income statement into the parent company's presentation currency;

6. Impact on financial statements and ratios

f. analyze how the current rate method and the temporal method affect financial statements and ratios;

7. Hyperinflationary subsidiaries

g. analyze how alternative translation methods for subsidiaries operating in hyperinflationary economies affect financial statements and ratios.