Question

if the functional currency is not the foreign currency, where do I report the changes in...

if the functional currency is not the foreign currency, where do I report the changes in currency?

Homework Answers

Answer #1

Before answering this question, I would like to tell the concept of functional currency and foreign currency ( transactional currency).

Suppose a US company has business in France. So France business will be done in Euro. However, when transactions of France is consolidated in US then dollar is functional currency and Euro is transactional currency)

Changes in currency will be reported in :-

1.Profit and loss.

2. Net investment in the foreign operation is reported initially in other comprehensive income. On disposal, it will be shown in profit and loss account.

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