Thread: Consolidation of a foreign subsidiary

A US company has a canadian subsidiary. When consolidating this subsidiary should we simply translate the canadian balance sheet into USD as the end of the period or should we identify assets and liabilities denominated in USD and include their original USD value in the consolidated balance sheet.

Starting point: since you have a "Canadian" balance sheet then you are keeping the subsidiary's books in CAD (Canadian Dollar). Next we need to know what is the FASB 52 functional currency policy you've chosen for this subsidary: A) the CAD is the functional currency or B) the USD is the functional currency. That will guide you in how to translate the CAD statements. So tell us that info and we can go to the next step 'cause the translation method of certain accounts is affected by this.

Originally Posted by aspacct

A US company has a canadian subsidiary. When consolidating this subsidiary should we simply translate the canadian balance sheet into USD as the end of the period or should we identify assets and liabilities denominated in USD and include their original USD value in the consolidated balance sheet.

You should identify assets and liabilities denominated in USD and include their original USD value in the consolidated balance sheet.