Compare and contrast the four currency translation methods. Which two methods are used by FASB 52? Be sure to discuss the two step method used in FASB 52 and how highly inflationary economies (around 100% inflation in a three year period) are handled. Discuss how Japan and Germany approach the translation of currency.© BrainMass Inc. brainmass.com October 25, 2018, 2:20 am ad1c9bdddf
Currency Translation Methods
As a result of the volatility and fluctuations of exchange rates, companies with foreign operations are faced with accounting issues on how to translates their foreign operations and integrate them in to the consolidate financial statements and related reports (White, Sondhi & Fried, 2008, p. 162). The Statement of Financial Accounting Standards No. 52, which is issued by the Financial Accounting Standards Board or FASB, Foreign Currency Translation, prescribes reporting requirements for the translation of the financial statements of these foreign operations.
There are four methods of alternative currency translation methods as discussed by Shapiro (2005) and these are:
1. Current/non current method. This method uses the current exchange rate in converting the foreign operations' accounts, however income statement accounts ...
This solution compares and contrasts the four currency translation methods.
Global Financial Management (Fin630) Individual Project
Points Possible: 250
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Deliverable Length: 5-7 Pages
The most popular way for international expansion is for a local firm to acquire foreign companies. One of the most benefits for international expansion is global distribution capability that helps expanding the market share.
There are different implications of running a company that is within or outside of the European Union. If you were the head of a firm based in the United States, please answer the following questions, providing the rationale behind your answers:
Would you seek to acquire a company within the European Union or outside of it? Why?
Describe the advantages and disadvantages of the choice you made.
Describe the advantages and disadvantages inherent in the option you did not choose.
Explain why an MNC may invest funds in a financial market outside its own country.
Explain why some financial institutions prefer to provide credit in financial markets outside their own country.
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Interpret the operation of the international financial system, its current state, and challenges for the future.
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