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Foreign Currency Translation

[FOR-in KUR-en-see trans-LAY-shun]

What is the definition of Foreign Currency Translation?
The process of converting the financial statements of a company's foreign operations from the local currency into the functional currency of the parent company. Unrealized gains or losses due to exchange rate fluctuations are included in stockholders' equity until the foreign operation is substantially liquidated.
Using Foreign Currency Translation in an Example

A U.S. company with operations in Japan must translate its Japanese subsidiary's financial statements from yen to dollars for consolidation. This involves adjusting the financial figures to reflect current exchange rates, and any resulting translation adjustments are recorded in the accumulated other comprehensive income section of the parent company's equity.

Using Foreign Currency Translation in a sentence

During the quarterly financial review, the CFO discussed the impact of foreign currency translation on the company's financials, noting significant exchange rate fluctuations.

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An accounting method of valuing inventory under which the costs of the first goods acquired are the first costs charged to expense, commonly known as First In, First Out.
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FOB Destination

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Fair Credit Reporting Act

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Federal Reserve System

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Filing of Returns

The mandatory submission of specified forms by taxpayers who meet statutory requirements, completed in accordance with prescribed formats and within set deadlines to be recognized as valid.
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The discipline concerned with the management, investment, and allocation of money and other financial assets, including the processes of acquiring and managing resources.
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Financial Accounting Standards

Official regulations issued by the Financial Accounting Standards Board (FASB), which are integral to Generally Accepted Accounting Principles (GAAP) in the United States. These standards guide the preparation of financial reports to ensure accuracy, consistency, and transparency.
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Financial Statements

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Finished Goods

Products that have been completely manufactured and are ready to be sold to customers.
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Finished Goods Inventory

Finished Goods Inventory refers to the inventory account that contains products that have completed the manufacturing process and are ready for sale.
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Firm

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First In, First Out (FIFO)

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Fixed Costs

Costs that do not vary with the level of production or sales, and remain constant regardless of changes in business activity levels within a certain range.
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Fixed Price

A predetermined price at which goods, services, or securities are sold, not subject to change under normal circumstances.
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Fixture

An attachment to real property that is intended to be permanent and would likely cause damage to the property if removed.
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Floor

In finance and accounting, 'floor' can refer to the minimum value, rate, or price set for assets, stocks, or interest rates. Specifically, it denotes the lowest price limit at which inventory can be valued, accounting for net realizable value minus a normal profit margin. It can also indicate the minimum level that interest rates or currency values are structured not to fall below, or in trading, the area of a stock exchange where active trading occurs.
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Flotation Cost

The expenses incurred by a company in issuing new stocks or bonds, including underwriting fees, legal fees, and registration fees.
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Forecast

Prospective financial statements that predict an entity's expected financial position, results of operations, and cash flows based on current and historical data.
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Forecasted Balance Sheet

A financial statement that projects the assets, liabilities, and equity of a business at a future date, based on current data, trends, and projections.
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Forecasted Income Statement

A financial statement that estimates the expected revenue, expenses, and net income of a business for a future period.
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Forecasting of Cash Flow

The process of estimating the future financial transactions of a business, specifically focusing on the cash receipts and cash payments expected in a future period.
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Foreclosure

The legal process by which a lender or creditor seizes property when the borrower fails to make required payments on a mortgage or loan, as stipulated in the contract.
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Foreign Corporation

A corporation that is incorporated under the laws of a country or state other than the one in which it primarily operates. The tax obligations of a foreign corporation in a host country depend on its level of economic engagement, such as having a Nexus or effectively connected income within that country.
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Foreign Exchange

Foreign exchange involves the trading of currencies from different countries against each other and the instruments employed in making payments between countries.
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Foreign Tax Credit

A nonrefundable tax credit that U.S. taxpayers can claim on their federal income tax return for income taxes paid or accrued to a foreign government, which helps to mitigate the issue of double taxation on the same income.
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Form 10-K

An annual report required by the SEC from exchange-listed companies, which provides a comprehensive overview of the company's financial performance and includes the balance sheet, income statement, and cash flow statement. It is due within 90 days after the end of the company's fiscal year.
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Form 10-Q

An SEC filing that serves as a quarterly report, required to be filed 45 days after the end of each of the first three quarters of a company's fiscal year, detailing its financial performance.
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Form 8-K

An SEC filing required when a publicly held company experiences a significant event that could affect its financial condition or the value of its stock, necessitating prompt disclosure to shareholders and the Securities and Exchange Commission.
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Form W-4

A form used by employees to indicate their tax situation to employers, specifying exemptions and the amount to withhold for federal income taxes and Federal Insurance Contributions Act (FICA) taxes.
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Franchise

A legal arrangement where the owner of a trade name, known as the franchisor, allows another party, known as the franchisee, to use the name on a non-exclusive basis to sell goods or services. This agreement often includes strict supervisory powers for the franchisor over the franchisee, who operates as an independent business.
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Franchise Tax

A state tax levied on corporations for the privilege of doing business under a corporate charter in that state.
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Willful misrepresentation by one person of a fact with the intent to deceive another person, leading to damage or harm.
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Free Cash Flow

The amount of cash that a company has available after accounting for the capital expenditures necessary to maintain or expand its asset base. It is a useful measure for investors to assess the financial health and profitability of a company.
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Free On Board (FOB)

A shipping term used to indicate the point at which the ownership and responsibility of goods pass from the seller to the buyer. 'FOB destination' means the seller retains risk of loss until the goods reach the buyer's location, whereas 'FOB shipping point' means the buyer assumes responsibility once the goods leave the seller's premises.
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Freight In

Transportation charges on merchandise purchased for resale, typically recorded as part of the inventory cost on the balance sheet.
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Freight Out

Transportation charges on merchandise sold, categorized as an operating expense in accounting.
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Full Disclosure

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A method of accounting and presentation where assets and liabilities are grouped according to their specific purpose, primarily used by non-profit organizations and government entities to ensure and demonstrate compliance with funding and operational objectives.
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Fundamental Analysis

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Funding

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Future Contract

A legally binding agreement to buy or sell a standardized quantity of a commodity or financial asset at a predetermined price at a specified time in the future.
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Future Value

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