Autumn2005- TBS 907-Lecture 10- International Finance

Autumn2005 TBS 907-Lecture 10 International Finance

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Unformatted text preview: and) are translated at the historical exchange rate in effect when the account was first recorded. Monetary/Nonmonetary Method Methods of Hedging Translation Exposure ( CONTD) Temporal Method The underlying principal is that assets and liabilities should be translated based on how they are carried on the firm's books. Balance sheet account are translated at the current spot exchange rate if they are carried on the books at their current value. Items that are carried on the books at historical costs are translated at the historical exchange rates in effect at the time the firm placed the item on the books. All balance sheet items (except for stockholder's equity) are translated at the current exchange rate. Very simple method in application. A "plug" equity account named cumulative translation adjustment is used to make the balance sheet balance. Current Rate Method...
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This note was uploaded on 07/10/2009 for the course FIN FIN taught by Professor Dr. during the Spring '09 term at Baptist College of Health Sciences.

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