Foreign currency accounting – Remeasurement and translation

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We continue our miniseries on foreign currency accounting with an episode on foreign currency remeasurement and translation.

• Foreign currency measurement is the process by which an entity expresses transactions whose terms are denominated in a foreign currency in its functional currency.
• Foreign currency translation is the process of expressing a foreign entity’s functional currency financial statements in the reporting currency.

In this episode, we discuss:

• 03:09 – An overview of the accounting for foreign currency remeasurement and translation
• 05:56 – Measurement of foreign currency transactions
• 09:56 – Exchange rate considerations
• 22:26 – Translating financial statement of foreign entities
• 29:00 – Releasing cumulative translation adjustments (CTA)

For more information see chapters 4 and 5 of our Foreign currency guide. Also, check out our other episode in this miniseries, Foreign currency accounting – Determining functional currency. Additionally, follow this podcast on your favorite podcast app for more episodes.
John Horan is a managing director in PwC’s National Office where he assists clients with complex accounting issues in the areas of foreign currency, liabilities and equity, earnings per share, and derivatives and hedging. John specializes in large capital transactions and initial public offerings.
Ross Drucker is a partner in PwC’s National Office where he assists clients with financial instrument accounting, including derivatives and hedging transactions, foreign currency, and structured capital markets transactions. He recently returned to PwC following two years working at the SEC in the Office of the Chief Accountant, focusing on financial instrument transactions as well as cryptocurrency.
Heather Horn is the PwC National Office Sustainability and Thought Leader, responsible for developing our communications strategy and conveying firm positions on accounting, financial reporting, and sustainability matters. In addition, she is part of PwC’s global sustainability leadership team, developing interpretive guidance and consulting with companies as they transition from voluntary to mandatory sustainability reporting. She is also the engaging host of PwC’s accounting and reporting weekly podcast and quarterly webcast series.
Transcripts available upon request for individuals who may need a disability-related accommodation. Please send requests to [e-mail].

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1. Foreign currency accounting – Remeasurement and translation (00:00:00)

2. An overview of the accounting for foreign currency remeasurement and translation (00:03:09)

3. Measurement of foreign currency transactions (00:05:56)

4. Exchange rate considerations (00:09:56)

5. Translating financial statement of foreign entities (00:22:26)

6. Releasing cumulative translation adjustments (CTA) (00:29:00)