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134 Cards in this Set

  • Front
  • Back
local currency
is the currency of the country in which the foreign subsidiary is located.
functional currency
is defined as the currency of the primary economic environment in which the foreign subsidiary generates and expends cash. The choice reflects management’s judgment. It can be the currency in which the subsidiary conducts operations or some other currency.
reporting currency
is the currency in which the multinational firm prepares its final, consolidated financial statements.
Monetary Assets Temporal
current rate
Nonmonetary Assets Temporal
historical rate
Common Stock Temporal
historical rate
Equity Temporal
mixed rate
Revenues and SG&A Temporal
average rate
COGS Temporal
historical rate
Depreciation Temporal
historical rate
Net Income Temporal
mixed rate
Monetary Assets All- Current
current rate
Nonmonetary Assets All- Current
current rate
Common Stock All- Current
historical rate
Equity All- Current
current rate
Revenues and SG&A All- Current
average rate
COGS All- Current
average rate
Depreciation All- Current
average rate
Net Income All- Current
average rate
Net exchange exposure (all current)
shareholder's equity
Net exchange exposure (temporal)
(cash + accounts receivable) - (accounts payable + current debt + long term debt)
flow effect (all-current or temporal)
change in exposure (in LC) * (ending rate - average rate)
holding gain/loss effect
beginning exposure (in LC) * (ending rate - beginning rate)
translation gain/loss effect
flow effect + holding gain/loss efffect
Cumulative translation adjustment
all current method of accumulating the translation gain/loss on the balance sheet in the equity section of comprehensive income
Temporal Method Depreciation Blended Rate formula
(beg fix ass/end fix ass * historical rate) + (fixed ass inv./end fixd asset * avg. rate)
Net fixed assets (remeasured balance sheet)
Remeasured Ending Fixed Assets - Remeasured Ending accumulated depreciation
Temporal (Appreciating Currency) - Revenues
same
Temporal (Appreciating Currency) - COGS
lower
Temporal (Appreciating Currency) - Gross profit
higher
Temporal (Appreciating Currency) - Depreciation
lower
Temporal (Appreciating Currency) - Other Expenses
same
Temporal (Appreciating Currency) - NI before translation g/l
higher
Temporal (Appreciating Currency) - NI after translation g/l
uncertain
Temporal (Appreciating Currency) - Cash
same
Temporal (Appreciating Currency) - Accounts Receivable
same
Temporal (Appreciating Currency) - Inventory
lower
Temporal (Appreciating Currency) - Fixed Assets
lower
Temporal (Appreciating Currency) - Total Assets
lower
Temporal (Appreciating Currency) - Liabilities
same
Temporal (Appreciating Currency) - Equity
lower
All-current (Appreciating currency) - Revenues
same
All-current (Appreciating currency) - COGS
higher
All-current (Appreciating currency) - Gross profit
lower
All-current (Appreciating currency) - Depreciation
higher
All-current (Appreciating currency) - Other Expenses
same
All-current (Appreciating currency) - NI before translation g/l
lower
All-current (Appreciating currency) - NI after translation g/l
uncertain
All-current (Appreciating currency) - Cash
same
All-current (Appreciating currency) - Accounts Receivable
same
All-current (Appreciating currency) - Inventory
higher
All-current (Appreciating currency) - Fixed Assets
higher
All-current (Appreciating currency) - Total Assets
higher
All-current (Appreciating currency) - Liabilities
same
All-current (Appreciating currency) - Equity
higher
Temporal (Depreciating LC) - Revenues
same
Temporal (Depreciating LC) - COGS
higher
Temporal (Depreciating LC) - Gross profit
lower
Temporal (Depreciating LC) - Depreciation
higher
Temporal (Depreciating LC) - Other Expenses
same
Temporal (Depreciating LC) - NI before translation g/l
lower
Temporal (Depreciating LC) - NI after translation g/l
uncertain
Temporal (Depreciating LC) - Cash
same
Temporal (Depreciating LC) - Accounts Receivable
same
Temporal (Depreciating LC) - Inventory
higher
Temporal (Depreciating LC) - Fixed Assets
higher
Temporal (Depreciating LC) - Total Assets
higher
Temporal (Depreciating LC) - Liabilities
same
Temporal (Depreciating LC) - Equity
higher
All-current (Depreciating LC) - Revenues
same
All-current (Depreciating LC) - COGS
lower
All-current (Depreciating LC) - Gross profit
higher
All-current (Depreciating LC) - Depreciation
lower
All-current (Depreciating LC) - Other Expenses
same
All-current (Depreciating LC) - NI before translation g/l
higher
All-current (Depreciating LC) - NI after translation g/l
uncertain
All-current (Depreciating LC) - Cash
same
All-current (Depreciating LC) - Accounts Receivable
same
All-current (Depreciating LC) - Inventory
lower
All-current (Depreciating LC) - Fixed Assets
lower
All-current (Depreciating LC) - Total Assets
lower
All-current (Depreciating LC) - Liabilities
same
All-current (Depreciating LC) - Equity
lower
Temporal (Appreciating Currency) - Current Ratio
lower
Temporal (Appreciating Currency) - Quick Ratio
same
Temporal (Appreciating Currency) - A/R Turnover
same
Temporal (Appreciating Currency) - Inventory turnover
uncertain
Temporal (Appreciating Currency) - Fixed asset turnover
higher
Temporal (Appreciating Currency) - Total asset turnover
higher
Temporal (Appreciating Currency) - Gross profit margin
higher
Temporal (Appreciating Currency) - Net profit margin
uncertain
Temporal (Appreciating Currency) - ROE
uncertain
Temporal (Appreciating Currency) - ROA
uncertain
Temporal (Appreciating Currency) - Interest coverage
higher
Temporal (Appreciating Currency) - LTD to total capital
higher
All-current (Appreciating currency) - Current Ratio
higher
All-current (Appreciating currency) - Quick Ratio
same
All-current (Appreciating currency) - A/R Turnover
same
All-current (Appreciating currency) - Inventory turnover
uncertain
All-current (Appreciating currency) - Fixed asset turnover
lower
All-current (Appreciating currency) - Total asset turnover
lower
All-current (Appreciating currency) - Gross profit margin
lower
All-current (Appreciating currency) - Net profit margin
uncertain
All-current (Appreciating currency) - ROE
uncertain
All-current (Appreciating currency) - ROA
uncertain
All-current (Appreciating currency) - Interest coverage
lower
All-current (Appreciating currency) - LTD to total capital
lower
Temporal (Depreciating LC) - Current Ratio
higher
Temporal (Depreciating LC) - Quick Ratio
same
Temporal (Depreciating LC) - A/R Turnover
same
Temporal (Depreciating LC) - Inventory turnover
uncertain
Temporal (Depreciating LC) - Fixed asset turnover
lower
Temporal (Depreciating LC) - Total asset turnover
lower
Temporal (Depreciating LC) - Gross profit margin
lower
Temporal (Depreciating LC) - Net profit margin
uncertain
Temporal (Depreciating LC) - ROE
uncertain
Temporal (Depreciating LC) - ROA
uncertain
Temporal (Depreciating LC) - Interest coverage
lower
Temporal (Depreciating LC) - LTD to total capital
lower
All-current (Depreciating LC) - Current Ratio
lower
All-current (Depreciating LC) - Quick Ratio
same
All-current (Depreciating LC) - A/R Turnover
same
All-current (Depreciating LC) - Inventory turnover
uncertain
All-current (Depreciating LC) - Fixed asset turnover
higher
All-current (Depreciating LC) - Total asset turnover
higher
All-current (Depreciating LC) - Gross profit margin
higher
All-current (Depreciating LC) - Net profit margin
uncertain
All-current (Depreciating LC) - ROE
uncertain
All-current (Depreciating LC) - ROA
uncertain
All-current (Depreciating LC) - Interest coverage
higher
All-current (Depreciating LC) - LTD to total capital
higher
Remeasurement
translation of local currency transactions into functional currency
Translation
conversion of functional currency of subsidiary into reporting currency
Temporal method (where does gain/loss appear?)
income statement