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: January 15, 2023
6 Reviews (33 ratings)

Reviews

4
Anonymous Author
Overall course is ok. However, the later part toward the end is a little complicated but the instructor rushed through it, while spending too much time on simple things at the beginning of the lesson.

5
Member's Profile
Lots of good information and very well presented. Complicated areas were very clearly explained and presented in an easy-to-understand way.

5
Anonymous Author
This was particularly useful and applicable to my client engagements. I appreciate the comparisons made between IFRS & US GAAP. Thank you

5
Member's Profile
The concepts of remeasurement and translation were explained well. Use of case studies was very helpful

4
Anonymous Author
Appreciated all the examples. The last few sections moved a bit too quickly through the slides.

4
Member's Profile
Good overview

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 .
Instructor for this course
Course Syllabus
INTRODUCTION AND OVERVIEW
  Introduction to Consolidating Foreign Subsidiaries3:04
  Consolidation Criteria5:40
UNDERSTANDING FUNCTIONAL CURRENCY
  Currency Classifications2:06
  Determining the Functional Currency under US GAAP5:04
  Determining the Functional Currency under US GAAP-Case Study 17:30
  Determining the Functional Currency under US GAAP-Case Study 23:02
  Determining Functional Currency under IFRS6:19
EXCHANGE RATE AND Accounting Methods
  Exchange Rates3:11
  Remeasurement Method8:19
  Current Rate Method5:35
  Acquisition of Foreign Subsidiary5:00
  Consolidating Foreign Subsidiary-Case Study 110:44
  Consolidating Foreign Subsidiary-Case Study 212:59
  Highly Inflationary Economies4:36
CONTINUOUS PLAY
  Consolidating Foreign Subsidiaries1:23:09
SUPPORTING MATERIAL
  Slides: Consolidating Foreign SubsidiariesPDF
  Consolidating Foreign Subsidiaries Glossary/ IndexPDF
REVIEW AND TEST
  REVIEW QUESTIONSquiz
 FINAL EXAMexam