国际会计第六章外币交易.ppt

These objectives are based on the concept of a functional currency. Recall that the functional currency of an entity is the currency of the primary economic environment in which it operates and generates cash flows. Moreover, the functional currency designation determines the choice of translation method employed for consolidation purpose and the disposition of exchange gains and losses. The following current rate procedures are used All foreign currency assets and liabilities are translated to dollars using the exchange rate prevailing as of the balance sheet date, capital accounts are translated at historical rate. Revenues and expenses are translated using the exchange rate prevailing on the transacion date, although weighted average rates can be used for expediency. Translation gains and losses are reported in a separate component of consolidatd stockholders’ equity. These exchange adjustments do not go into the income statement until the foreign operation is sold or the investment is judged to have permanently lost value. Translation when the parent currency is functional. Foreign currency financial statements remeasured to reporting currency using the temporal method. Translation gains and losses resulting from the translation process are included in current income All translation gains and losses resulting from the tranalation process are included in determining current periodincome. Monetary assets and liabilities and non-monetary assets valued at current market price are translated using the rate prevailing as of the financial statement date; other non-monetary items and capital accouts are translated at historical rate. Revenues and expenses are translated using average exchange rates for the period except those items realted to non-monetary items, which are translated using historical rate. Translation gains and losses are reflected in current income. An exception to the current-rate method is required for subsidiaries located in places where the c