国际会计第七版英文版课后答案(第六章).docxVIP

Chapter6

ForeignCurrencyTranslation

DiscussionQuestionsSolutions

1.Foreigncurrencytranslationistheprocessofrestatingaforeignaccountbalancefromone

currencytoanother.Foreigncurrencyconversionistheprocessofphysicallyexchangingonecurrencyforanother.

2.Intheforeignexchangespotmarket,currenciesboughtandsoldmustbedeliveredimmediately,normallywithin2businessdays.ThusaSingaporeantouristbuyingU.S.dollarsattheairport

beforeboardingaplaneforNewYorkwouldhandoverSingaporedollarsandimmediately

receivetheequivalentamountinU.S.dollars.Theforwardmarkethandlesagreementsto

exchangeafixedamountofonecurrencyforanotheronanagreeddateinthefuture.For

example,aFrenchmanufacturerexportinggoodsinvoicedineurostoaJapaneseimporteron60-daycredittermswouldbuyaforwardcontracttosellyenforeuros2monthsinthefuture.

Transactionsintheswapmarketinvolvethesimultaneouspurchase(orsale)ofonecurrencyinthespotmarketandthesale(orpurchase)ofthesamecurrencyintheforwardmarket.Thus,a

Canadianinvestorwishingtotakeadvantageofhigherinterestrateson6-monthTreasurybillsintheUnitedStateswouldbuyU.S.dollarswithCanadiandollarsinthespotmarketandinvestintheUnitedStates.ToguardagainstafallinthevalueoftheU.S.dollarbeforematurity(when

theU.S.dollarproceedsareconvertedbacktoCanadiandollars),theCanadianinvestorwould

simultaneouslyenterintoaforwardcontracttosellU.S.dollarsforCanadiandollars6monthsinthefutureattodaysforwardexchangerate.

3.Thequestionreferstoalternativeexchangeratesthatareusedtotranslateforeignfinancial

statements.Thecurrentrateistheexchangerateatthefinancialstatementdate.Itis

sometimescalledtheyear-endorclosingrate.Thehistoricalrateistheexchangerateatthetimeoftheunderlyingtransaction.Theaveragerateisthea