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2012, iss. 27, pp. 277-290
Translation vs. conversion of the financial statements of foreign branch
aUniversity of Novi Sad, Faculty of Economy, Subotica
bUniversity of Kragujevac, Faculty of Economy

emailljiljanad@ef.uns.ac.rs, jasminabogic@ptt.rs
Keywords: foreign subsidiary's financial statements translation; foreign subsidiary's financial statements remeasurement; remeasurement gain/loss; translation adjustment
Abstract
Multinational companies (MNCs) have to restate the foreign currency financial statements of their subsidiaries for preparing consolidated financial statements. In restating foreign currency financial statements into the parent company's reporting currency, accountants can use two different procedures, such as foreign currency financial statements translation or remeasurement. The resulting effect from foreign currency financial statement translation is reported in the consolidated balance sheet, as a separate component of the stockholder' s equity (Cumulative Translation Adjustment). On the contrary, foreign currency financial statements remeasurement effect is reported in consolidated income statement (Remeasurement Loss/Gain). The use of different restatement methods can have significant impact on key items, such as net income, total assets, total equity and financial ratios, too.
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article language: Serbian
document type: Professional Paper
published in SCIndeks: 22/03/2013

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