Analysis of flexible budgets and standard costs emphasizes the importance of a similar unit of measure for meaningful comparisons and evaluations. When Polaris compiles its financial reports in compliance with GAAP, it applies the same unit of measurement, U.S. dollars, for most measures of business operations. One issue for Polaris is how best to adjust account values for its subsidiaries that compile financial reports in currencies other than the U. S. dollar.
Required:
1. Read Polaris Note 1 in Appendix A and identify the financial statement where it reports the annual adjustment (remeasurement) for foreign currency translation.
2. Translating financial statements requires the use of a currency exchange rate. For each of the following three financial statement items, explain the exchange rate the company would apply to translate into U. S. dollars. a. Cash b. Sales revenue c. Property, plant and equipment