Using the U.S. Security and Exchange Commission’s EDGAR database, select and res

Question

Using the U.S. Security and Exchange Commission’s EDGAR database, select and research a company with foreign subsidiaries. To minimize the chances of classmates selecting the same company, select one that begins with the same letter as your first or last name.( My First and Last Name begins with an "M" Look in the notes related to foreign currency transaction and report what the company’s policy is. Based on the review of the financial statement, determine whether the company has translated (using the current rate method) or remeasured (using the temporal method). Lastly, explain the footnote disclosures that were provided in the financial statement that are related to foreign currency transactions. These disclosures will state how the company handles foreign currency transactions. MY first name starts with an S and last name with an T

Explanation / Answer

Company I choose is Service Corporation International. They use current rate method of the tranlation.

Their footnote disclosure explains that their all assets and liabilities of foreign subsidiaries are translated into U.S. dollars at exchange rates in effect as of the end of the reporting period. Revenue and expense items are translated at the average exchange rates for the reporting period. The resulting translation adjustments are included in Equity as a component of Accumulated other comprehensive income in the Consolidated Statement of Equity and Consolidated Balance Sheet.

Further, Upon reviewing the 2016 foreign operational results as of the fourth quarter, management concluded a foreign valuation allowance was necessary as it was not more likely than not that certain foreign net deferred tax assets would be realized based on all available evidence as of December 31, 2016. During 2016, an additional $15.9 million foreign valuation allowance has been recorded which was partially offset by changes in the existing foreign valuation allowances due to fluctuations in the currency exchange rate. Also, in 2016, the state valuation allowance decreased by $9.6 million due to state net operating loss expirations. These valuation allowances can be affected in future periods by changes in tax laws, changes to statutory tax rates and changes in estimates of future taxable income.

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