Translation amount on the balance sheets
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Suppose that on January 1, American Golf's French subsidiary, Golf du France, had a balance sheet that showed current assets of FF 1 million; current liabilities of FF 300,000; total assets of FF 2.5 million and total liabilities of FF 900,000. On December 31, Golf du France's balance sheet in Frances was unchanged from the figures given above, but the Franc had declined in value from $0.1270 at the start of the year to $0.1180 at the end of the year. Under FASB-52, what is the translation amount to be shown on American Golf's equity account for the year if the Franc is the functional currency? How would your answer change if the dollar were the functional currency?
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FASB-52 states that the balance sheets must be translated using the current rate method which means that we need to translate all assets and liabilities at the current exchange rate.
The net foreign currency ...
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