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The world is becoming more interconnected due to non-stop advances in communication and transportation technologies, facilitating cross-border flows of investment and equity capital.

The concept of foreign direct investment (FDI), which is defined as an investment in the form of a controlling ownership in a business in one country by an entity based in another country, has become a cornerstone in today’s global economic system.

Accordingly, the number of businesses that have operations in multiple countries has increased significantly, and the fair presentation of foreign subsidiaries’ financial statements to the parent entity’s stakeholders is needed.

The hallmark of consolidated foreign subsidiaries is that their financial statements are presented in a different currency from their parent’s presentation currency.

This course explains and illustrates the accounting processes for translating foreign subsidiaries financial statements step-by-step, including consolidation criteria, types of financial statements currencies, the proper accounting treatment for the resulting translation gain/(loss), and the currencies of hyperinflationary economies.

This course uses practical cases and examples that simplify the theory behind US GAAP standard ASC Subtopic 830-30 “Translation of financial statements” and IFRS standard IAS 21 “The Effects of Changes in Foreign Exchange Rates”, highlighting the main differences between them.

Course Key Concepts: GAAP- ASC 830 – foreign Currencies – foreign Subsidiaries – foreign currencies -translation – IFRS - IAS 21 – other comprehensive income (OCI) - hyperinflationary economies – consolidated – consolidation.

Learning Objectives

  • Identify consolidation criteria.
  • Explore and understand the process of translating subsidiaries’ foreign currencies.
  • Discover and understand the accounting processes for translating the currencies of hyperinflationary economies.
  • Recognize the differences between US GAAP and IFRS in consolidating foreign subsidiaries.
  • Identify consolidation criteria.
  • Explore and understand the process of translating subsidiaries’ foreign currencies.
  • Discover and understand the accounting processes for translating the currencies of hyperinflationary economies.
  • Recognize the differences between US GAAP and IFRS in consolidating foreign subsidiaries.
Last updated/reviewed: March 28, 2021

Prerequisites

Course Complexity: Foundational

No advanced preparation or prerequisites are required for this course.

Education Provider Information

Company:
Illumeo, Inc., 75 East Santa Clara St., Suite 1215, San Jose, CA 95113
Contact:
For more information regarding this course, including complaint and cancellation policies, please contact our offices at (408) 400- 3993 or send an e-mail to .
Course Syllabus
INTRODUCTION AND OVERVIEW
  3:04Introduction to Consolidating Foreign Subsidiaries
  5:40Consolidation Criteria
UNDERSTANDING FUNCTIONAL CURRENCY
  2:06Currency Classifications
  5:04Determining the Functional Currency under US GAAP
  7:30Determining the Functional Currency under US GAAP-Case Study 1
  3:02Determining the Functional Currency under US GAAP-Case Study 2
  6:19Determining Functional Currency under IFRS
EXCHANGE RATE AND Accounting Methods
  3:11Exchange Rates
  8:19Remeasurement Method
  5:35Current Rate Method
  5:00Acquisition of Foreign Subsidiary
  10:44Consolidating Foreign Subsidiary-Case Study 1
  12:59Consolidating Foreign Subsidiary-Case Study 2
  4:36Highly Inflationary Economies
CONTINUOUS PLAY
  1:23:09Consolidating Foreign Subsidiaries
SUPPORTING MATERIAL
  PDFSlides: Consolidating Foreign Subsidiaries
  PDFConsolidating Foreign Subsidiaries Glossary/ Index
REVIEW AND TEST
  quizREVIEW QUESTIONS
 examFINAL EXAM