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6-1 Final Project.docx - Posey Memorandum Assuming Posey...

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Posey MemorandumAssuming Posey obtains a subsidiary that currently uses non-functional US currency todo business, there are multiple things to be considered when an accountant is creating thefinancial statements. To prepare the consolidated financial statement to include the foreigncurrency, the subsidiary’s information from their financial statements will first need to betranslated into the parent company’s currency of choice, in this case a US functional currency.This can be done in one of two ways. Method one is the current rate method which is “used totranslate financial statements form the functional currency to U.S. dollars” (Christensen et al,2019). This method is the most common. However, there is also method two, the temporalmethod, which is “used to remeasure the financial statements from the recording currency to thefunctional currency” (Christensen et al, 2019). Because Posey uses US currency, either methodcan be applied to this case.

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Term
Winter
Professor
N/A
Tags
Balance Sheet, Income Statement, Generally Accepted Accounting Principles, Christensen

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