Develop Your Skills RESEARCH CASE 1-FOREIGN CURRENCY TRANSLATION AND HEDGING ACT
ID: 2799086 • Letter: D
Question
Develop Your Skills RESEARCH CASE 1-FOREIGN CURRENCY TRANSLATION AND HEDGING ACTIVITIES CPA Many companies make annual reports available on their corporate website, often under an Investors tab. Annual reports also can be accessed through the SEC's EDGAR system at www.sec.gov (under Filings. click Company Filings Search, type in Company Name, and under Filing Type, search for 10-K). skills Access the most recent annual report for a U.S.-based multinational company with which you are familiar to complete the following requirements. Required a. Identify the location(s) in the annual report that provides disclosures related to the translation of b. Determine whether the company's foreign operations have a predominant functional currency foreign currency financial statements and foreign currency hedging. Determine the amount of remeasurement gain or loss, if any, reported in net income in each of the three most recent years. c. d. Determine the amount of translation adjustment, if any, reported in other comprehensive income in each of the three most recent years. Explain the sign (positive or negative) of the translation adjust- ment in each of the three most recent years Determine whether the company hedges net investments in foreign operations. If so, determine the type(s) of hedging instrument used. e.Explanation / Answer
Company: Apple
Link: http://investor.apple.com/secfiling.cfm?filingid=1628280-16-20309&cik=320193
a) Item 7A. Quantitative and Qualitative Disclosures About Market Risk
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Notes to Consolidated Financial Statements
b) Yes, the company’s foreign operations have a predominant functional currency, that is, USD. Since, as we know that Apple has its distribution globally but the sales are represented in USD only.
c) It is mentioned in the annual report that the Company’s subsidiaries that use the U.S. dollar as their functional currency remeasure monetary assets and liabilities at exchange rates in effect at the end of each period, and inventories, property and nonmonetary assets and liabilities at historical rates. But its value has not been mentioned in figures in the report.
d) It is mentioned on page 40.
Change in foreign currency translation
2016: 75
2015: (411)
2014: (137)
Positive sign indicates a gain in foreign currency translation and Negative sign indicates loss.
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