Foreign Currency Remeasurement
When Remeasurement Is Required
Remeasurement is required when the accounting records are maintained in a currency that is not the entity's functional currency. The objective is to restate the financial statements into the functional currency before any translation occurs.
- Convert records into the functional currency.
- Apply different exchange rates to monetary and nonmonetary items.
- Recognize remeasurement gains and losses in earnings.
Note
Unlike translation adjustments, remeasurement gains and losses generally affect net income.
Summary
Remeasurement restores accounting records to the functional currency before financial reporting.