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Financial Statement Consolidation of Multinational Operations

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Large corporations typically have operations in multiple countries.  The following points outline the accounting processes for currency conversion of foreign based subsidiaries’ financial statements, so the subsidiaries’ financial results can be consolidated with the parent company.

  • Presentation Currency vs. Functional Currency vs. Local Currency

  • Foreign Currency Translation

  • Temporal Method

  • Current Rate Method

  • Determining the Functional Currency
  • Translation Methods and Financial Statement Effects
  • Translation Methods and Financial Ratios
  • Accounting for Subsidiaries in Hyperinflationary Economies

We will discuss these points in the following articles.

Previous Lesson

Accounting for Stock (or Share) Based Compensation

Next Lesson

Consolidation: Presentation Currency vs. Functional Currency vs. Local Currency

01
CFA Level 2: Financial Reporting Part 2 – Introduction
02
Intercorporate Investments Accounting - Ownership Categories
03
Minority Passive Investments – Accounting Classes
04
Minority Active Investments and the Equity Method for Financial Reporting
05
Joint Venture Investments
06
Controlling Interest Investments: Accounting for Business Combinations
07
Purchase Method of Accounting for Controlling Interest Investments or Acquisitions
08
Pooling of Interests Method to Account for Controlling Interest Investments
09
Purchase Method vs. Pooling of Interest Method
10
Acquisition Method to Account for Controlling Interest Investments
11
GAAP Purchase Method, IFRS Purchase Method, and GAAP Acquisition Method Accounting
12
Variable Interest Entities (VIEs) and Special Purpose Entities (SPEs)
13
Defined Benefits Plans vs. Defined Contribution Plans
14
Measuring the Defined Benefit Obligation
15
Pension Expense (both GAAP & IFRS) for the Income Statement
16
Defined Benefit Plans & the Company Balance Sheet
17
The Role of Actuarial Assumptions in DB Plan Accounting
18
Economic Pension Expense
19
Pensions and the Statement of Cash Flows
20
Accounting for Stock (or Share) Based Compensation
21
Financial Statement Consolidation of Multinational Operations
22
Consolidation: Presentation Currency vs. Functional Currency vs. Local Currency
23
Foreign Currency Translation
24
Temporal Method for Translation of Foreign Statements
25
Current Rate Method for Translation of Foreign Statements
26
Consolidating Financial Statements: Determining the Functional Currency
27
Translation Methods and Financial Statement Effects
28
Accounting for Subsidiaries in Hyperinflationary Economies
29
CFA Level 2: Financial Reporting 2 - Recommendations
30
MBS Weighted Average Life

Topics

Financial Analysis