A finished ACC-660 Topic 3 functional currency translation worksheet example, weighing mixed currency indicators, translating a peso subsidiary at three rates and showing where the loss would land otherwise. Searches like "acc 660 topic 3 assignment example", "acc660 topic 3 sample" and "acc-660 topic 3 example" land here.
What a finished ACC-660 Topic 3 functional currency translation worksheet looks like
The six indicators ASC 830 points to open the worksheet, each scored against the subsidiary's facts: cash flows, sales prices, sales market, expenses, financing and dealings with the parent. Figures are illustrative. Local sales carry 55 percent of revenue, labor and utilities are paid in pesos, components are priced in dollars and financing comes from a Mexican bank line. Choosing the peso, the worksheet translates opening net assets of 170 million pesos at 17.0 to $10.0 million, the year's 36 million pesos of income at an average 18.0 to $2.0 million, and closing net assets of 206 million pesos at 19.0 to $10,842,105. The $1,157,895 difference is a translation loss in other comprehensive income. Had the dollar been chosen, the peso monetary position alone would have produced a $247,678 loss in net income.
How an ACC-660 Topic 3 example is structured
The worksheet puts the judgment ahead of the arithmetic, because the arithmetic depends on it. Its first part lists the indicators in a table with the evidence for each and the direction it points, peso or dollar. A second part weighs the mixed ones, dollar-priced components and sales to the parent, against the local cost base and financing, and records the conclusion. Translation follows as a three-rate schedule: assets and liabilities at the closing rate, income at the average rate and contributed capital at historical rates. The fourth part derives the cumulative translation adjustment as the balancing figure and shows that it reconciles opening and closing net assets. A fifth part reruns the core figures under dollar remeasurement to show which statement would carry the loss. The worksheet ends by naming the facts whose change would reopen the determination, such as a shift toward sales to the parent.
Six indicators scored before any rate
Cash flows, sales prices, sales market, expenses, financing and dealings with the parent each receive a line stating the evidence and the currency it favors.
Mixed evidence weighed, not counted
Dollar components and sales to the parent point one way and local costs and financing the other, so the worksheet explains which indicators carry more weight here.
Three rates applied by line type
Assets and liabilities take the closing rate of 19.0, income takes the 18.0 average and capital stays at historical rates, which is why a balancing figure appears.
The adjustment derived as a remainder
The $1,157,895 translation loss equals closing translated net assets less opening net assets and translated income, and it is carried to accumulated other comprehensive income.
The dollar answer run beside it
Under remeasurement the loss would reach net income, $247,678 on the peso monetary position alone, so the determination decides which statement a reader sees move.
Where marks go in ACC-660 Topic 3
The heaviest deduction on this topic falls on worksheets that translate before deciding what the functional currency is. A paper that assumes the local currency because the subsidiary sits in Mexico skips the indicators, and on facts built to be mixed that assumption has no support. Listing all six indicators and counting them, four to two, turns a weighing into a tally, which many sections mark down. Applying the closing rate to equity, or the average rate to the balance sheet, forces an adjustment that no longer reconciles to anything. Papers that send the translation loss through net income confuse translation with remeasurement, the very distinction the determination settles. Some worksheets reach the right $1,157,895 and never mention the alternative, which leaves the reader unaware that a defensible preparer might have reported a smaller loss in income instead.
Get an ACC-660 Topic 3 example written to your instructions
Send the ACC-660 Topic 3 instructions, your rubric and the subsidiary statements and exchange rates your section provided. We write a custom example to them, with the functional currency indicators weighed on the facts, statements translated at the right rate for each line, the adjustment reconciled and the remeasurement alternative shown, in 24 to 48 hours. The first is free.
ACC-660 Topic 3 questions, answered
What happens if the indicators point in different directions?
Management makes a judgment about which currency the subsidiary mainly earns and spends in, and the indicators are evidence for that judgment rather than a scoring system. Where they conflict, the weight each deserves depends on the facts. The example explains why local costs and local financing outweigh dollar-priced components here, and it records the change in facts that would reverse the answer.
Why does the translation loss skip net income?
Because translation restates a whole foreign operation in the parent's reporting currency without any cash changing hands, and the operation's own results, measured in pesos, are unaffected. Reporting the effect in net income would mix exchange movements into a measure meant to show operating performance. The loss accumulates in other comprehensive income and is released to earnings when the investment is sold or substantially liquidated.
Does the determination ever change?
It can, when economic facts change significantly, for example if the subsidiary begins selling mostly to the parent and pricing in dollars. A change is never made to manage results, and it is accounted for prospectively rather than by restating earlier periods. The example lists the specific facts that would reopen its conclusion, which a reviewer can then monitor at each reporting date.