国际会计学第六版chapter_6Foreign Currency Translation教学讲义
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What is the difference between a spot, forward, and swap transaction?
What exchange rates are used in the currency translation process and what are their financial statement effects?
At the transaction date, each asset, liability, revenue, and expense denominated in a foreign currency is measured and recorded in the functional currency of the reporting entity at the spot exchange rate in effect on that date.
Facilitates repoeign audiences-of-interest.
Choi/Meek, 6/e
5
Types of Transaction Rates
Spot transactions: the physical exchange of one currency for another in which delivery takes place immediately.
Swap transaction: involves the simultaneous spot purchase and forward sale, or spot sale and forward purchase of a currency.
Choi/Meek, 6/e
7
Accounting for Spot Transactions
Direct quote: the exchange rate specifies the number of domestic currency units needed to acquire a unit of foreign currency.
Indirect quote: the exchange rate specifies
the price of a unit of the domestic currency in
terms of the foreign currency.
Choi/Meek, 6/e
6
Forward transaction: agreements to exchange a specified amount of one currency for another at a future date.
How does the temporal method of currency translation differ from the current rate method?
What is the relationship between currency translation and inflation?
At each balance sheet date, recorded balances denominated in a currency other than the functional currency of the reporting entity is adjusted to reflect the current exchange rate.
Choi/Meek, 6/e
8
Functional currency is the primary currency in which the reporting entity transacts business and generates and spends cash; e.g., dollars in the case of a U.S. reporting entity.
International Accounting, 6/e Frederick D.S. Choi Gary K. Meek
Chapter 6:
Foreign Currency Translation
Choi/Meek, 6/e
1
Learning Objectives
Why do firms translate from one currency to another?
Choi/Meek, 6/e
2
How does a translation gain or loss differ from a transactions gain or loss?
Is there more than one way of translating financial statements from one currency to another? If so, what are they?
Choi/Meek, 6/e
9
Accounting for Spot Transactions (contin)
Spot transaction: occurs when an enterprise purchases or sells goods for which payment is made in a foreign currency, or when it borrows or lends foreign currency.
Choi/Meek, 6/e
3
Facilitates the recording of foreign currency transactions; i.e., foreign currency sales, purchases, borrowing or lending in the consolidated entity’s reporting currency.
What exchange rates are used in the currency translation process and what are their financial statement effects?
At the transaction date, each asset, liability, revenue, and expense denominated in a foreign currency is measured and recorded in the functional currency of the reporting entity at the spot exchange rate in effect on that date.
Facilitates repoeign audiences-of-interest.
Choi/Meek, 6/e
5
Types of Transaction Rates
Spot transactions: the physical exchange of one currency for another in which delivery takes place immediately.
Swap transaction: involves the simultaneous spot purchase and forward sale, or spot sale and forward purchase of a currency.
Choi/Meek, 6/e
7
Accounting for Spot Transactions
Direct quote: the exchange rate specifies the number of domestic currency units needed to acquire a unit of foreign currency.
Indirect quote: the exchange rate specifies
the price of a unit of the domestic currency in
terms of the foreign currency.
Choi/Meek, 6/e
6
Forward transaction: agreements to exchange a specified amount of one currency for another at a future date.
How does the temporal method of currency translation differ from the current rate method?
What is the relationship between currency translation and inflation?
At each balance sheet date, recorded balances denominated in a currency other than the functional currency of the reporting entity is adjusted to reflect the current exchange rate.
Choi/Meek, 6/e
8
Functional currency is the primary currency in which the reporting entity transacts business and generates and spends cash; e.g., dollars in the case of a U.S. reporting entity.
International Accounting, 6/e Frederick D.S. Choi Gary K. Meek
Chapter 6:
Foreign Currency Translation
Choi/Meek, 6/e
1
Learning Objectives
Why do firms translate from one currency to another?
Choi/Meek, 6/e
2
How does a translation gain or loss differ from a transactions gain or loss?
Is there more than one way of translating financial statements from one currency to another? If so, what are they?
Choi/Meek, 6/e
9
Accounting for Spot Transactions (contin)
Spot transaction: occurs when an enterprise purchases or sells goods for which payment is made in a foreign currency, or when it borrows or lends foreign currency.
Choi/Meek, 6/e
3
Facilitates the recording of foreign currency transactions; i.e., foreign currency sales, purchases, borrowing or lending in the consolidated entity’s reporting currency.