What question did this study set out to answer?

The case aims to integrate the processes of translating foreign financial statements and their consolidation into U.S. GAAP.

June 15, 2026

Instructional Case: Foreign Subsidiary: Conversion to U.S. GAAP, Translation to U.S. Dollars and Consolidation.

Key Points

The case aims to integrate the processes of translating foreign financial statements and their consolidation into U.S. GAAP.
Financial statements of a British subsidiary adjusted to U.S. GAAP
Current-rate method used for translating into U.S. dollars
Consolidated financial statements prepared for the U.S. parent and British subsidiary
Adjusted, translated financial statements computed investment income under the equity method
Translation adjustments reflected for the fiscal year
Basic ratio analysis and foreign currency exposure discussion included

Abstract

Abstract The purpose of this case is to help the student integrate the process of translating foreign currency financial statements with the consolidation process. The financial statements of a British subsidiary are adjusted to U.S. GAAP, and the current-rate method is used to translate them into U.S. dollars. The subsidiary's adjusted, translated financial statements are then used to compute the parent's investment income and translation adjustment for the year under the equity method. Finally, consolidated financial statements are prepared for the U.S. parent and its British subsidiary. A basic ratio analysis and discussion of foreign currency exposure are also included.

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