Lesson: Remeasurement Method of Converting Financial Statements

In this engaging lesson, Nick Palazzolo, CPA, dives into the complexities of the remeasurement process used when converting from local to functional currency in accounting. He breaks down scenarios where this method comes into play, such as when working with the Mexican peso and transitioning to a functional currency in the European Union. Focusing on the remeasurement method, also known as the temporal method, Nick clarifies its application in reassessing the value of items or assets on the balance sheet. The lesson further explores the intricacies of applying current and historical exchange rates to various balance sheet and income statement items, while also noting where remeasurement gains or losses should be reported. Be prepared for insight on everything from inventory rates to equity adjustments as Nick makes a potentially confusing topic much more approachable, even ensuring there’s a good time to be had while learning about currency conversion in accounting.