Fundamentals of Advanced Accounting Errata List and ...



Fundamentals of Advanced Accounting Errata List and Corrections

Chapter 7

1. Exhibit 7-2 corrected below (highlighted material indicates corrections):

| |Remeasurement |Translation |

| |Investee's books of record remeasured into |Functional currency translated into parent/ |

| |functional currency—historical rate/ temporal method|investor's reporting currency—current |

| | |rate/functional method |

|When to use |When functional currency is not the books of record |When functional currency is the books of record |

| |(local) currency or when functional currency is |(local) currency or when the functional currency |

| |inflationary |is not highly inflationary |

|Assets and Liabilities: | | |

|Monetary items* or measured at current |Remeasure using current exchange rate |Translate using current exchange rate |

|values | | |

|Not monetary items or not measured at |Remeasure using historical exchange rates |Translate using current exchange rate |

|current values | | |

|Equity Accounts: | | |

|Equity accounts (excluding retained |Remeasure using historical exchange rates** |Translate using historical exchange rates** |

|earnings) | | |

|Retained earnings |Beginning remeasured balance plus (minus) remeasured|Beginning translated balance plus (minus) |

| |net income (loss) less dividends (remeasured using |translated net income (loss) less dividends |

| |historical exchange rates) |(translated using historical exchange rates) |

|Revenues and Expenses: | | |

|Representing amortization of historical |Remeasure using historical exchange rates |Translate using weighted-average exchange rate for|

|amounts | |the period |

|Other income and expense items |Remeasure using weighted-average exchange rate for |Translate using weighted-average exchange rate for|

| |the period |the period |

|Accounting for remeasurement gain or loss |Remeasurement gain or loss recorded as a component |Cumulative translation adjustment recorded as a |

|and translation adjustment |of current period net income |component of other comprehensive income. The |

| | |translation adjustment is recognized as a |

| | |component of current period net income when there |

| | |is a partial or complete sale or complete or |

| | |substantially complete liquidation of the |

| | |investment in the foreign entity. |

|*Monetary items represent rights to receive or pay an amount of money which is (1) fixed in amount or (2) determinable without reference to future |

|prices of specific goods/services; that is, its value does not change according to changes in price levels. |

|**If amounts are to be remeasured or translated at historical exchange rates which are traceable to transactions occurring prior to the parent's |

|date of acquisition, they should be remeasured/translated at the historical exchange rate existing at the parent's date of acquisition. |

| |

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