Foreign Currency Translation under U.S. GAAP-A Simplified Example

The translation of foreign currency based financial statements is an important issue in today’s global business environment. This article will discuss some of the key concepts by the use of a simplified example. The concepts to be discussed include the selection of a functional currency, translation of foreign currency based financial statements under U.S. Generally Accepted Accounting Principles (GAAP) using the current rate method, other comprehensive income and financial statement disclosure. The step by step example should help professionals through the process of foreign currency translation.