econ385 Lecture Notes - Lecture 8: Accounts Receivable, Accounts Payable, The Foreign Exchange

• School: Athabasca University
• Department: Business
• Course: econ385
• Professor: Barbara Czaban

Document Summary

Module 8: translation and consolidation of foreign subsidiaries: Which method used depends on the substance of the relationship between the parent and the subsidiary. The parent"s exposure is as if they had directly undertaken the transactions of the foreign operation themselves: a self-sustaining subsidiary is one that operates fairly independently of the parent. Although the parent controls the subsidiary, it does not actively participate in the subsidiary"s operating, investing, and financing activities. The parent"s exposure is limited to its investment in the foreign operation. Accounting methods the parent should use to translate the subsidiary"s statements: In module 7, the parent"s net monetary position was exposed to changes in the foreign exchange rates because these items were translated to the year-end exchange rate. Barbara wyntjes, b. sc. , cga: for the financial statement elements that would normally be valued at historical cost, historical exchange rate is used.