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Thursday, July 16, 2020 | History

2 edition of rationale underlying the functional currency choice. found in the catalog.

rationale underlying the functional currency choice.

Lawrence Revsine

rationale underlying the functional currency choice.

by Lawrence Revsine

  • 355 Want to read
  • 22 Currently reading

Published by American Accounting Association .
Written in English


Edition Notes

Photocopy of: Accounting review, vol.59, no.3, (1984), pp.505-514.

Other titlesAccounting review.
ContributionsAmerican Accounting Association.
ID Numbers
Open LibraryOL17260846M

For example, if the entered currency in a transaction is in US dollars, but the functional currency is the Euro, then any amount of change between the date of original entry and final payment would be recognized as FX gain or loss at the time of settlement. Intended Learning Outcomes After studying this topic, you should be able to: Explain the difference between functional and presentation currencies Understand the rational underlying the choice of a functional currency Apply the indicators in choosing a functional currency Account for changes in foreign exchange rates and exchange differences Translate financial statements into the presentation.

— Explanations of IFRS and IFRIC interpretations — Practical insights into implementation issues — Worked-out illustrations and examples — Case studies with solutions — Multiple-choice questions with answers — Extracts - Selection from Wiley IFRS: Practical Implementation Guide and Workbook, 3rd Edition [Book]. 36As noted in paragr the functional currency of an entity reflects the underlying transactions, events and conditions that are relevant to the entity. Accordingly, once the functional currency is determined, it can be changed only if there is a change to those underlying .

For the most part, people view rational choice theory as a species of intentional explanation; on the best available understanding, however, it should be viewed as contri-buting to the. Understand the necessity of remeasuring foreign currency balances into a company’s functional currency prior to the preparation of financial statements. Appreciate the problem that fluctuations in exchange rates cause when foreign currency balances are reported in a set of financial statements.


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Rationale underlying the functional currency choice by Lawrence Revsine Download PDF EPUB FB2

The Rationale Underlying the Functional Currency Choice Lawrence Revsine ABSTRACT: FASB Statement No. 52 on Foreign Currency Translation is designed to achieve compatibility between financial statement numbers and underlying economic effects of exchange rate changes. This result is accomplished through the selection of.

Heines, John, "What Do Open Marriages and the Accounting Rules for Changes in Foreign Exchange Rates Have in Common. Plenty of Opportu- nity to Fool Around." Fortes, (June rationale underlying the functional currency choice.

book, ). [9] Revsine, Lawrence, "The Rationale Underlying the Functional Currency Choice," The Accounting Review, LIX: July ). [10]Author: Robert W. Boatler. The rationale underlying the functional currency choice. Identifying the functional currency.

Translation into the functional currency. Changing the functional currency. Translation into the presentation currency. Consolidating foreign subsidiaries — where local currency is the functional currencyAuthor: Ruth Picker.

Functional currency of an entity reflects the transactions, events, and conditions under which the entity operates and conducts its business.

Ones the functional currency has been decided, it does not change. A functional currency should only be changed if there is a change in the nature of underlying transactions, events, and relevant. functional currency, and that creates a challenge for the auditor.

We the underlying transactions, events or circumstances of the company. currency is a free choice and if the company decides to change its presentation currency as a result of the change in theFile Size: KB. functional currency was a foreign concept in Spain, and the effects of the functional currency choice were not made clear to the managers.

Consequently, they continued to manage the fund until late in November without appreciating the impact the currency choice had on the fund’s results.

Additional difficulties caused by. The rationale underlying the functional currency choice. Identifying the functional currency. Translation into the functional currency.

Changing the functional currency. Translation into the presentation currency. Consolidating foreign subsidiaries - where local currency is the functional currency. 24 Translation of the financial statements of foreign entities Translation of a foreign subsidiary’s statements Functional and presentation currencies The rationale underlying the functional currency choice Identifying the functional currency Translation into the functional currency Changing the functional.

Preface About the authors Acknowledgements List of Acronyms PART 1 CONCEPTUAL FRAMEWORK 1 The IASB and its Conceptual Framework The International Accounting Standards Board (IASB(R)) The purpose of a conceptual framework Qualitative characteristics of useful financial information Going concern assumption Definition of elements in financial statements.

Assume the functional currency of a foreign entity is the U.S. dollar, but the books are kept in euros. The objective of remeasurement of a foreign entity's accounts is to A) produce the same results as if the foreign entity's books were maintained in the currency of the largest customer.

Table of Contents. Preface About the authors Acknowledgements List of Acronyms PART 1 CONCEPTUAL FRAMEWORK 1 The IASB and its Conceptual Framework The International Accounting Standards Board (IASB (R)) The purpose of a conceptual framework Qualitative characteristics of useful financial information Going concern assumption Definition of elements.

Guide to functional currency rules. The electronic version of this document is the only authorised version. Printed copies may be out of date. Read this guide to find out more about the functional currency rules, including.

Answer to: Examine the five following cases and determine if the functional currency of a U.S. parent's foreign unit is the foreign currency or the. The rationale underlying the functional currency choice.

Identifying the functional currency. Translation into the functional currency. Changing the functional currency. Translation into the presentation currency. Consolidating foreign subsidiaries — where local currency is the functional currency.

Assumptions underlying financial statements 26 Measurement 27 Summary 29 Discussion questions 30 Problems 31 References 34 Part 2 ELEMENTS 35 2 Sharehohgers' equity: share capital and reserves 36 Shareholders' equity 37 Types. Functional currency is the currency which a company generates and releases cash.

Transactional currency is the local currency for a set of books and records. It is the currency of a country. Here we analyze the rationale behind using cryptocurrencies (with a historical perspective), the need behind a global value of store, and the rising demand in this field.

For a currency to be. Date recorded: 08 Jan The IFRIC discussed a request for guidance on determining the functional currency of an investment holding company and, in particular, the issue whether the underlying economic environment of subsidiaries should be considered in determining the functional currency in the separate financial statements of the investment holding company.

Your functional currency is NOT a matter of your choice, but the matter of your economic environment. You should determine it by the careful assessment of factors like the primary currency in which you make sales, cost of sales, etc.

In fact, it is the functional currency in which you keep your accounting records and book the transactions. In a paper, William Meckling and Michael Jensen supported the Freidman Doctrine, providing the quantitative economic rationale by proposing a single financial objective for the company.

Jensen formally asserted in a paper that a corporation’s sole responsibility was to increase shareholder value through higher short-term stock. The functional currency is the primary currency of the foreign entity's operating environment.

It can be either the parent's reporting currency or a foreign currency (generally the local currency). The functional currency orientation results in the following rule: parents currency --> temporal method --> gain/loss reported in NI.governing foreign currency translation process and the rational underlying the a foreign currency as their functional currency (i.e., switched to the current-rate method) and not to firms that.Description: The Accounting Review is the premier journal for publishing articles reporting the results of accounting research and explaining and illustrating related research methodology.

The scope of acceptable articles embraces any research methodology and any accounting-related subject. The primary criterion for publication in The Accounting Review is the significance of the contribution.