OracleBIBlog Search

Friday, March 5, 2010

The Impact of IFRS for EPM Reporting – Part 7

In Part 7, I want to provide more detail on the similarities and differences regarding Foreign Currency Matters. This week I'll keep it short due to other projects I am working on... but again the details below were from a presentation during a company sponsored educational seminar about IFRS.

Foreign Currency Matters


  • Similar approaches to foreign currency translation, guidance is different, but generally results in the same determination
  • Both consider the same economies to be hyperinflationary
  • Both required foreign currency transactions to be remeasured into functional currency with amounts resulting from changes in exchange rates being reported in income
  • Both require assets and liabilities to be translated at period-end rate, and income statement amounts generally at average rates, with differences in equity


Translation in hyperinflationary economy

  • US GAAP – Local functional currency remeasured as if it was the reporting currency (parent)
  • IFRS – local functional currency financial statements are indexed using a general price index and then translated to the reporting currency at the current rate

Consolidation of foreign operations

  • US GAAP – step by step method is used
  • IFRS – method is not specified. Either the direct or the step by step method is used.