Question

The FASB Accounting Standards Codification represents the single source of authoritative U.S. generally accepted accounting principles.
Required: Determine the specific citation for accounting for the following:

1.A change in exchange rates between the functional currency and the currency in which a transaction is denominated increases or decreases the expected amount of functional currency cash flows upon settlement of the transaction. That increase or decrease in expected functional currency cash flows is a foreign currency transaction gain or loss that generally shall be included in determining net income for the period in which the exchange rate changes.

2.allows such a derivative contract of a foreign currency exposure of an unrecognized firm commitment to be designated as a hedge.

3.This Subtopic requires an entity to report comprehensive income either in a single continuous financial statement or in two separate but consecutive financial statements.

Answer 1

1. FASB Accounting Standards Codification Topic 830, provides guidance for the Foreign Currency Matters,

ASC 830 comprises five Subtopics

830-10 Overall

830-20 Foreign Currency Transactions

830-30 Translation of Financial Statements

830-230 Statement of Cash Flows

830-740 Income Taxes

So, in the given case FASB code 830-20 Foreign currecy Transaction & FASB code 830-30 Translation of financial statement provides the guidance for determing the foreign currency and restating the balances to be represented in the financial statements.

2. FASB Accounting codification topic 815, provides the guidance for derivative contract of a foreign currency exposure of an unrecognized firm commitment to be designated as a hedge.

It also states that hedge of a foreign currency denominated firm commitment gains and losses are recognized in earnings

3. Standards Update ASU 2011-05 Topic 220 Presentation of Comprehensive Income provides the guidance on entity to report comprehensive income either in a single continuous financial statement or in two separate but consecutive financial statements

It states In a single continuous statement, the entity is required to present the following items

Components of net income

Total net income

Components of other comprehensive income

Total for other comprehensive income

Total for comprehensive income.

In the two-statement approach, an entity is required to present the statement of net income and the statement of other comprehensive income. The statement of net income should include the following items

Components of net income

Total net income

Note-

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