Đang chuẩn bị nút TẢI XUỐNG, xin hãy chờ
Tải xuống
Invite you to consult the content chapter 11 "Management of translation exposure" of lecture International financial management below to capture the content: Alternative currency translation methods, translation exposure, financial statement impact of translation alternative,. | CHAPTER ELEVEN MANAGEMENT OF TRANSLATION EXPOSURE ON EXPOSURE Changes in income statement items and the book value of balance sheet assets and liabilities that are caused by an exchange rate change. ALTERNATIVE CURRENCY TRANSLATION METHODS Current noncurrent method current asset liability are translated at the current ER noncurrent asset liability are translated at the historical ER Most income statement items are translated at the average ER. ALTERNATIVE CURRENCY TRANSLATION METHODS Monetary nonmonetary method Monetary items cash account payables and receivable and long-term debt are translated at the current rate Nonmonetary items inventory fixed assets and longterm investment are translated at the historical rates Income statement items are translated at average exchange rate during the period except for revenue and expense items related to nonmonetary assets and liability 1 ALTERNATIVE CURRENCY TRANSLATION METHODS Temporal method This method appears to be a modified version of monetary non-monetary method. The only difference inventory is always translated at the current rate ALTERNATIVE CURRENCY TRANSLATION METHODS Current rate method All balance sheet and income items are translated at the current rate IMPACT OF TRANSLATION ALTERNATIVE Monetary Non Temporal Cu rrent N on cu rrent Current Assets Cash market securities Inventory at market Prepaid expenses w.v.v. .y.y.1. total current assets Fixed asset - Dep. Goodwill Total assets Liabilities Current liabilities Longterm debt SBSBBBS Deferred income taxes Total liabilities Capital stock Retained earnings Total equity Total liabilities equity Translation gain loss T IMPACT OF TRANSLATION ALTERNATIVE FC4 1 FC 5 1 Monetary Temporal Current non Current rate Assets FC us us us us us Cash mar.securities 2 600 650 520 520 520 520 Inventory at market 3 600 900 900 720 720 720 Prepaid expenses 200 50 50 50 40 40 total current assets 6 400 1 600 1 470 1 290 1 280 1 280 Fixed asset - Dep. 3 600 900 900 900 900 720 .