Accounting International
Translation of Foreign Currency Financial Statements
Perusahaan yang memiliki operasi diluar negaranya sendiri dalam pengertian memiliki berbagai cabang usaha di negara lain, biasanya mempersiapkan financal statements menggunakan mata uang lokal (mata uang negara masing-masing). Oleh sebab itu, maka cabang atau subsidiaries harus melakukan translasi laporan keuangannya kedalam mata uang perusahaan induk. Dengan begitu maka laporan keuangan yang disajikan dapat dikonsolidasi dengan baik.
Perusahaan anak biasanya menggunakan lokal GAAP, karena itu harus di translasikan ke GAAP perusahan induk. Hal ini disebabkan karena perusahaan induk yang melakukan FDI (foreign Direct Investment) biasanya menempatkan FDI-nya di negara-negara yang belum tentu memiliki kesamaan GAAP dengan perusahaan induk. Dengan diadakannya translasi laporan keuangan baik dari sisi GAAP dan mata uang yang samam dengan perusahaan induk makalaporan keuangan tersebut dapat dimengerti oleh investor dan memberikan informasi yang lebih akurat.
Ada dua isu utama yang berhubungan dengan perubahan (translasi) laporan keuangan pada perusahan yang beroperasi di luar negeri, antara lain:
- Metode apa translasi apa yang seharusnya digunakan?
- Dimana seharusnya penyesuaian translaasi yang telah dilakukan dilaporkan pada konsolidasi laporan keuangan?
Setiap laporan keuangan harus diubah dengan menggunakan exchange rate yang tepat. Exchange rate yang ada, antara lain:
@ Current exchange rate adalah rate yang terjadi pada tanggal neraca, yaitu 31 Desember
@ Historical exchange rate adalah rate yang ada pada saat tanggal transaksi terjadi, dan biasanya merupakan rate yang terjadi pada masa lampau.
@ Average rate adalah rate yang dihitung berdasarkan rata-rata rate yang terjadi selama satu tahun.
Balance Sheet Exposure
Asetdankewajiabanditranslasi menggunakan current exchange rate, sebagai akibat dari perbedaan rate dengan historical rate, makadiungkapkan sebagai resiko dari penyesuian translasi.
Foreign Currency
| ||
Balance Sheet Exposure
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Appreciates
|
Deperciates
|
Net Assets
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Positive translation adjustment
|
Negative translation adjustment
|
Net Liabilities
|
Negative translation adjustment
|
Positive translation adjustment
|
Penjelasan dari tabel:
Net assets terjadi jika hasil dari translasi ternyata nilai asset lebih besar daripada niali kewajiban.
Net liabilities terjadi jika hasil dari translasi ternyata nilai asset lebih kecil daripada nilai kewajiban.
Ketika mata uang negara asing terapresiasi (artinya mata uang lokal melemah terhadap mata uang pembandingnya dan nilainya juga meningkat), dalam keadaan net asset maka diungkapkan sebagai positive translation adjustment.
Ketika mata uang negara asing terapresiasi (artinya mata uang lokal menguat terhadap mata uang pembandingnya dan nilainya juga menurun), dalam keadaan net liability maka diungkapkan sebagai negative translation adjustment.
Translation Methods
Ada empat metode translasi, antara lain:
1.Metode current/noncurrent
2.Metode monetary/nonmonetary
3.Metode temporal
4.Metode current rate
Metode Current/Noncurrent
Current assets and liabilities ditranslasikan menggunakan rate atau kurs yang berlaku sekarang (current exchange rate. Sedangkan Noncurrent assets, liabilities and stockholders’ equity accounts ditranslasikan menggunakan historical exchange rates. Tidak ada basik teoritis yang menguatkan metode ini sehingga metode ini tidak diterima oleh IFRS dan GAAP.
Metode Monetary/Nonmonetary
Monetary assets and liabilities ditranslasikan menggunakan rate atau kurs yang berlaku sekarang (current exchange rate.Nonmonetary assets and liabilities and stockholders’ equity accounts ditranslasikan menggunakan historical exchange rates.
Penyesuaian translasi kurs untuk mengukur net dari foreign exchange gain or loss pada current assets and liabilities jika item-item ini diungkapakan di laporan keuangan induk.
Temporal Method
Tujuannya adalah untuk mengubah financial statements seolah-olah anak perusahaan menggunakan mata uang dari perusahaan induk.
Item-item yang dicatat oleh subsidiary pada historical cost, termasuk seluruh item stockholders’ equity ditranslasikan pada historical exchange rates.
Item-item yang dicatat oleh subsidiary pada current cost, termasuk seluruh item stockholders’ equity ditranslasikan pada current exchange rates.
Item-item Income statement ditranslasikan pada exchange rate sebagai akibat dari pengaruh waktu transaksi.
Current Rate Method
Tujuannya adalah untuk merefleksikan bahwa keseluruhan investasi perusahaan induk pada perusahaan subsidiary diungkapkan sebagai perubahan resiko.
Seluruh aset dan kewajiban ditranslasikan pada current exchange rate.
Akun-akun Stockholders’ equity accounts ditranslasikan pada historical exchange rates.
Item-item Income statement ditranslasikan pada exchange rate sebagai akibat dari waktu transaksi.
Translation methods illustrated
U.S. Inc. owns Juarez, SA, a subsidiary in Mexico which was established January 1, 2005.
Juarez’s balance sheet items as of 12/31/05, in pesos.
Cash1,000Accounts payable2,000
Accounts rec.2,000Long-term debt6,000
Inventory2,500Capital stock3,000
Fixed assets8,000Retained earnings1,500
Accum. depr.1,000
Juarez’s income statement items for 2005, in pesos.
Sales20,000Depr. exp1,000
COGS14,000Interest exp.500
S,G,&A exp.2,500Income tax exp.500
Additional information:
¨There was no beginning inventory.
¨Inventory, which is carried at cost, was acquired evenly during the last quarter of 2005.
¨Purchases were made evenly throughout year.
¨Fixed assets were acquired on January 1, 2005.
¨Capital stock was sold on January 1, 2005.
Relevant exchange rates (U.S. dollar per Mexican peso)
January 1, 2005$0.10
Average for 2005$0.095
Average for 4th quarter 2005$0.09
December 31, 2005$0.08
Translation based on Current Rate Method – Income Statement
Income Statement – 2005
Sales1,900
COGS1,330
Gross profit570
S,G,&A238
Depreciation expense95
Interest expense48
Income tax expense47
Net income142
Current Rate Method – Balance Sheet
Balance Sheet – December 31, 2005
Cash80Accounts payable160
Accounts Rec.16Long-term debt480
Inventory200Capital stock300
Fixed Assets, net545Retained earnings142
Total assets985Cumulative translation adj.(97)Total liab. & S.E.985
Temporal Method – Balance Sheet
Balance Sheet – December 31, 2005
Cash80Accounts payable160
Accounts Rec.16Long-term debt480
Inventory225Capital stock300
Fixed Assets, net700Retained earnings225
Total assets1,165Total liab. & S.E.1,165
Temporal Method – Balance Sheet
Income Statement – 2005
Sales1,900
COGS1,343
Gross profit557
S,G,&A238
Depreciation expense100
Interest expense48
Income tax expense47
Remeasurement gain101
Net income225
Contoh kasus yang lainnya:
Palmerstown Company
Palmerstown Company establish a subsidiary in aforeign country on January 1, Year 1, by investing 8000000 Pounds when the exchange rate was $1.00/Pound. Palmerstown Company negotiated a bank loan of 4000000 Pounds on January 5, Year1, and purchased plant and equipment in the amount of 10000000 Pounds January 8, Year1,. Plant and equipment was depreciated on a straight line basis over a 10 years useful life. The first purchase of inventory in the amount of 1000000 Pounds was made on January 10, Year 1. Additional inventory of 12000000 pounds was acquired at three points at the time during the year at an average exchange rate of $0.86/pounds. Inventory on hand at year-end was acquired when the wchange rate was $0.83/pounds. The FIFO method is used to determine cost of goods sold. Additional exchange rate for the pound during the year 1 aere as follows:
January 1, Year 11.00
Average Year 10.90
December 31, Year 10.80
The foreign subsidiary’s income statement for Year 1 and balance sheet at December 31, Year 1, are as follows:
Incone Statement
For the Year Ened December 31, Year1
Sales
|
15,000
|
Cost of goods sold
|
(9,000)
|
Gross profit
|
6,000
|
Selling and administrative expense
|
(3,000)
|
Depreciation expense
|
(1,000)
|
Income before tax
|
2,000
|
Income taxes
|
(600)
|
Net income
|
1,400
|
Plus: Retained earnings, 1/1/Y1
|
-
|
Retained earnings, 12/31/Y1
|
1,400
|
Balance Sheet
At December 31, Year 1
Cash2,400
Inventory4,000
Fixed assets10,000
Less: accumulated depreciation(1,000)
Total assets15,400
Current liabilities2,000
Long-term debt4,000
Contributed capital8,000
Retained earnings1,400
Total liabilities and stockholders’ equity15,400
CASE 2: Palmerstown Company
Exchange Rates
|
$/pound
|
January 1, Year 1
|
1.00
|
January 1-31, Year 1
|
1.00
|
Average Year 1
|
0.90
|
When inventory purchases made
|
0.86
|
December 31, Year 1
|
0.80
|
(a). Pound is the functional currency – Current rate method
Exchange
|
|||
Pounds
|
Rate
|
||
Sales
|
15,000
|
0.900
|
13,500
|
Cost of goods sold
|
(9,000)
|
0.900
|
(8,100)
|
Gross profit
|
6,000
|
5,400
| |
Selling and administrative expense
|
(3,000)
|
0.900
|
(2,700)
|
Depreciation expense
|
(1,000)
|
0.900
|
(900)
|
Income before tax
|
2,000
|
1,800
| |
Income taxes
|
(600)
|
0.900
|
(540)
|
Net income
|
1,400
|
1,260
| |
Plus: Retained earnings, 1/1/Y1
|
-
|
-
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Retained earnings, 12/31/Y1
|
1,400
|
1,260
| |
Cash
|
2,400
|
0.800
|
1,920
|
Inventory
|
4,000
|
0.800
|
3,200
|
Fixed assets
|
10,000
|
0.800
|
8,000
|
Less: accumulated depreciation
|
(1,000)
|
0.800
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(800)
|
Total assets
|
15,400
|
12,320
| |
Current liabilities
|
2,000
|
0.800
|
1,600
|
Long-term debt
|
4,000
|
0.800
|
3,200
|
Contributed capital
|
8,000
|
1.000
|
8,000
|
Retained earnings
|
1,400
|
Above
|
1,260
|
Translation adjustment
|
-
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to balance
|
(1,740)
|
Total
|
15,400
|
12,320
|
Calculation of Cumulative Translation Adjustment
Exchange
|
|||
Pounds
|
Rate
|
||
Net assets, 1/1/Y1
|
8,000
|
1.000
|
8,000
|
Net income, Year 1
|
1,400
|
0.900
|
1,260
|
Net assets, 12/31/Y1
|
9,400
|
9,260
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Net assets, 12/31/Y1 at
current exchange rate
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9,400
|
0.800
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7,520
|
Translation adjustment, Year 1 (negative)
|
1,740
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(b). U.S. dollar is the functional currency – Temporal method
Exchange
|
|||
Pounds
|
Rate
|
||
Sales
|
15,000
|
0.900
|
13,500
|
Cost of goods sold
|
(9,000)
|
Sched. A
|
(7,880)
|
Gross profit
|
6,000
|
5,620
| |
Selling and administrative expense
|
(3,000)
|
0.900
|
(2,700)
|
Depreciation expense
|
(1,000)
|
1.000
|
(1,000)
|
Remeasurement gain (loss)
|
-
|
from below
|
180
|
Income before tax
|
2,000
|
2,100
| |
Income taxes
|
(600)
|
0.900
|
(540)
|
Net income
|
1,400
|
1,560
| |
Plus: Retained earnings, 1/1/Y1
|
-
|
-
| |
Retained earnings, 12/31/Y1
|
1,400
|
1,560
| |
Cash
|
2,400
|
0.800
|
1,920
|
Inventory
|
4,000
|
0.860
|
3,440
|
Fixed assets
|
10,000
|
1.000
|
10,000
|
Less: accumulated depreciation
|
(1,000)
|
1.000
|
(1,000)
|
Total assets
|
15,400
|
14,360
| |
Current liabilities
|
2,000
|
0.800
|
1,600
|
Long-term debt
|
4,000
|
0.800
|
3,200
|
Contributed capital
|
8,000
|
1.000
|
8,000
|
Retained earnings
|
1,400
|
to balance
|
1,560
|
Total
|
15,400
|
14,360
|
Schedule A - Cost of goods sold
Exchange
|
|||
Pounds
|
Rate
|
||
Beginning inventory
|
1,000
|
1.000
|
1,000
|
Purchases
|
12,000
|
0.860
|
10,320
|
Ending inventory
|
(4,000)
|
0.860
|
(3,440)
|
Cost of goods sold
|
9,000
|
7,880
|
Calculation of Remeasurement Gain
Exchange
|
|||
Pounds
|
Rate
|
||
Net monetary assets, 1/1/Y1
|
8,000
|
1.000
|
8,000
|
Increase in monetary assets:
|
|||
Sales
|
15,000
|
0.900
|
13,500
|
Decrease in monetary assets:
|
|||
Acquisition of beginning inventory
|
(1,000)
|
1.000
|
(1,000)
|
Purchase of inventory during year
|
(12,000)
|
0.860
|
(10,320)
|
Selling and administrative expenses
|
(3,000)
|
0.900
|
(2,700)
|
Income taxes
|
(600)
|
0.900
|
(540)
|
Purchase of fixed assets
|
(10,000)
|
1.000
|
(10,000)
|
Net monetary liabilities, 12/31/Y1
|
(3,600)
|
(3,060)
| |
Net monetary liabilities, 12/31/Y1 at
|
|||
current exchange rate
|
(3,600)
|
0.800
|
(2,880)
|
Remeasurement gain - Year 1
|
(180)
|
c. With the pound as functional currency, the U.S. dollar net income reflected in the consolidated income statement is $1,260.If the U.S. dollar were the functional currency, the amount reflected in consolidated net income would be $1,560, 24% higher.The amount of total assets reported on the consolidated balance sheet is 17% smaller than if the U.S. dollar were functional currency [($14,360 – $12,320)/$12,320].
The relations between the current ratio, the debt to equity ratio, and profit margin calculated from the FC financial statements and from the translated U.S. dollar financial statements are shown below.
U.S $
| |||
Pounds
|
Current Rate
|
Temporal
| |
Current ratio:
|
|||
Current assets
|
6,400
|
5,120
|
5,360
|
Current liabilities
|
2,000
|
1,600
|
1,600
|
3.2
|
3.2
|
3.35
| |
Debt to equity ratio:
|
|||
Total liabilities
|
6,000
|
4,800
|
4,800
|
Total stockholders’ equity
|
9,400
|
7,520
|
9,560
|
0.638
|
0.638
|
0.502
| |
Profit margin:
|
|||
Net income
|
1,400
|
1,260
|
1,560
|
Sales
|
15,000
|
13,500
|
13,500
|
0.093
|
0.093
|
0.116
|
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