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SFAS 8 versus SFAS 52

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SFAS 8 established guidance for foreign currency translation accounting. Due to opposition to SFAS 8, further guidance was provided by SFAS 52. Why would multinational companies oppose the guidance provided in SFAS 8? Does SFAS 52 address the concerns with SFAS 8?

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The Statement of Financial Accounting Standards (SFAS) No. 8 was issued by the Financial Accounting Standards Board (FASB) in 1975 in order to combine the treatment of foreign currency translation by requiring companies to use the temporal method which treats all foreign subsidiaries as dependent extensions of their United States parent company and also requires immediate recognition of translation gains and losses on their income statement. Many in the business community and accounting professions opposed SFAS No. 8 due to the fact that reported income numbers were extremely susceptible to fluctuations in foreign exchange rates. The statement also seriously ...

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