Advanced Financial Reporting - MCI and VCL (University Name)

The assignment addresses the financial reporting requirements for MCI, a Canadian company, and its subsidiary VCL, based in Mexico. The core issue revolves around the translation of VCL's financial statements from Mexican pesos to Canadian dollars, MCI's functional currency. The report emphasizes the importance of adhering to International Financial Reporting Standards (IFRS) guidelines, specifically IAS 21, for currency translation. It outlines the correct application of exchange rates for monetary and non-monetary items, ensuring the accurate representation of VCL's financial performance within MCI's consolidated financial statements. The report stresses the need for a true and fair presentation of financial information, aligning with the conceptual framework of IFRS and discusses the impact of foreign exchange on the financial statements. The report also highlights the importance of accurate reporting and translation of financial information for proper consolidation.

Running head: ADVANCED FINANCIAL REPORTING
Advanced Financial Reporting
Name of the Student:
Name of the University:
Authors Note:

1
ADVANCED FINANCIAL REPORTING
Memo
To:
From:
Subject: A briefing document for management meeting
VCL is though a Mexican based company but is a 100% subsidiary of MCI, a publicly traded
Canadian company. Hence, the functional currency of VCL should be Canadian dollar as it is a
wholly subsidiary company of MCI. The functional currency of MCI is Canadian dollar simply
because it is based in Canada and a Canadian company’s functional as well as reporting currency
shall be the official currency of the country.
The financial statements of VCL shall be translated using appropriate exchange rate between
Canadian dollar and Mexican peso on different dates based on the items to be translated. For
non-monetary items such as fixed assets, the exchange rate on the date acquisition or on the date
of fair valuation, in case the assed valued using fair value method shall be used to translate such
items into Canadian dollars. In case of monetary items such as current assets and liabilities the
exchange rate applicable as on the date of the financial statements shall be used to translate these
into Canadian dollars from Mexican peso.
International Financial Reporting Standards (IFRS) guidelines on this regard is contained in IAS
21. Accordingly, at the time of translation of monetary and non-monetary items of financial
statements of VCI the percept of IAS 21 must be followed and accordingly the impact of changes
in foreign exchange shall be documented and reported in the financial statements of MCI.

2
ADVANCED FINANCIAL REPORTING
The financial reporting goals of MCI include representation of true and fair picture of the
organization and its subsidiaries in the consolidated financial statements of the former. Thus, the
translation of items of financial statements of VCL must be made in accordance with the IFRS
percept and conceptual framework without any deviation.
Date:
Place: