国际财务管理PPTChap14.ppt

Chapter Outline Translation Methods FASB Statement 8 FASB Statement 52 Management of Translation Exposure Empirical Analysis of the Change from FASB 8 to FASB 52 Translation Methods Current/Noncurrent Method Monetary/Nonmonetary Method Temporal Method Current Rate Method Current/Noncurrent Method The underlying principal is that assets and liabilities should be translated based on their maturity. Current assets translated at the spot rate. Noncurrent assets translated at the historical rate in effect when the item was first recorded on the books. This method of foreign currency translation was generally accepted in the United States from the 1930s until 1975, at which time FASB 8 became effective. Current/Noncurrent Method Current assets translated at the spot rate. e.g. DM2=$1 Noncurrent assets translated at the historical rate in effect when the item was first recorded on the books. e.g. DM3=$1 Monetary/Nonmonetary Method The underlying principal is that monetary accounts have a similarity because their value represents a sum of money whose value changes as the exchange rate changes. All monetary balance sheet accounts (cash, marketable securities, accounts receivable, etc.) of a foreign subsidiary are translated at the current exchange rate. All other (nonmonetary) balance sheet accounts (owners’ equity, land) are translated at the historical exchange rate in effect when the account was first recorded. Monetary/Nonmonetary Method All monetary balance sheet accounts are translated at the current exchange rate. e.g. DM2=$1 All other balance sheet accounts are translated at the historical exchange rate in effect when the account was first recorded. e.g.DM3=$1 Temporal Method The underlying principal is that assets and liabilities should be translated based on how they are carried on the firm’s books. Balance sheet account are translated at the current spot exchange rate if they are carried on the books at their current value. Items that are carried on the books a