Analyze the fundamental differences between remeasurement and the translation approach when preparing a foreign currency financial statement for a company of your choice. Next, determine one to two (1-2) situations when remeasurement is most appropriate. Provide support for your position. Solution Translation: the conversion of financial statements from one currency to another Remeasurement VS Translation Remeasurement Vs. Translation In preparing consolidated financial statements on a worldwide basis, the foreign currency financial statements prepared by foreign operations must be translated into the parent company’s reporting currency. A.   The two major issues related to the translation of foreign currency financial statements are: (1) which method should be used, and (2) where should the resulting translation adjustment be reported in the consolidated financial statements. B.   Translation methods differ on the basis of which accounts are translated at the current exchange rate and which are translated at historical rates. Accounts translated at the current exchange rate are exposed to translation adjustment (balance sheet exposure). C. Different translation methods give rise to different concepts of balance sheet exposure and translation adjustments of differing sign and magnitude. .

1. Analyze the fundamental differences between remeasurement and the translation approach when
preparing a foreign currency financial statement for a company of your choice. Next, determine
one to two (1-2) situations when remeasurement is most appropriate. Provide support for your
position.
Solution
Translation: the conversion of financial statements from one currency to another
Remeasurement VS Translation
Remeasurement
Vs.
Translation
In preparing consolidated financial statements on a worldwide basis, the foreign currency
financial statements prepared by foreign operations must be translated into the parent
company’s reporting currency.
A.  The two major issues related to the translation of foreign currency financial statements
are: (1) which method should be used, and (2) where should the resulting translation adjustment
be reported in the consolidated financial statements.
B.  Translation methods differ on the basis of which accounts are translated at the current
exchange rate and which are translated at historical rates. Accounts translated at the current
exchange rate are exposed to translation adjustment (balance sheet exposure).
C. Different translation methods give rise to different concepts of balance sheet exposure and
translation adjustments of differing sign and magnitude.