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International Finance
II M.Com - 19COP19
Google Classroom Code: an4ekq4
Topic : International Exposure and Management
MAP Code : M
Facilitator
Expert Video
References:
https://drive.google.com/file/d/1hRXiWTJZgbxUaknV9DZvEcRJ9ou-YIi-/view?usp=sharing
Animated Video
SKASC 3
FOREIGN CURRENCY TRANSACTIONS
FOREIGN CURRENCY TRANSACTIONS
SINGLE-TRANSACTION PERSPECTIVE
TWO-TRANSACTION PERSPECTIVE
Under a two-transaction perspective, collection of
the foreign currency receivable is considered a
separate event from the sale that gave rise to it.
FOREIGN CURRENCY
TRANSLATION
Companies operating internationally use a variety
of methods to express, in terms of their domestic
currency, the assets, liabilities, revenues, and
expenses that are stated in a foreign currency.
SINGLE RATE METHOD
The single rate method, long popular in Europe,
applies a single exchange rate, the current or
closing rate, to all foreign currency assets and
liabilities. Foreign currency revenues and expenses
are generally translated at exchange rates
prevailing when these items are recognized. For
convenience, however, revenues and expenses are
typically translated by an appropriately weighted
average of current exchange rates for the period.
MULTIPLE RATE METHODS
CURRENT–NONCURRENT METHOD
a foreign subsidiary’s current assets (assets that
are usually converted to cash within a year) and
current liabilities (obligations that mature within a
year) are translated into their parent company’s
reporting currency at the current rate. Noncurrent
assets and liabilities are translated at historical
rates.
MULTIPLE RATE METHODS
CURRENT–NONCURRENT METHOD
Codes
1. Accounts receivable
4. Deferred income
5.
Goodwill
6.
Other paid-in capital
7.
Depreciation
8.
Refundable deposits
9.
Common stock
10.
Accumulated depreciation on
Buildings
11.
Deferred income tax liabilities
12.
Accounts payable
TEST YOUR KNOWLEDGE
SKASC 35
SKASC 36