文档介绍：INTERNATIONAL FINANCIAL MANAGEMENT EUN / RESNICK Second Edition 14 Chapter Fourteen Management of Translation Exposure Chapter Objective: This chapter discusses the impact that unanticipated changes in exchange rates may have on the consolidated financial statements of the multinational company. McGraw-Hill/Irwin Copyright ? 2001 by The McGraw-panies, Inc. All rights reserved. 14- 1 Chapter Outline ? Translation Methods ? FASB Statement 8 ? FASB Statement 52 ? Management of Translation Exposure ? Empirical Analysis of the Change from FASB 8 to FASB 52 McGraw-Hill/Irwin Copyright ? 2001 by The McGraw-panies, Inc. All rights reserved. 14- 2 Translation Methods ? Current/Noncurrent Method ? ary/ary Method ? Temporal Method ? Current Rate Method McGraw-Hill/Irwin Copyright ? 2001 by The McGraw-panies, Inc. All rights reserved. 14- 3 Current/Noncurrent Method ? The underlying principal is that assets and liabilities should be translated based on their maturity. ? Current assets translated at the spot rate. ? Noncurrent assets translated at the historical rate in effect when the item was first recorded on the books. ? This method of foreign currency translation was generally accepted in the United States from the 1930s until 1975, at which time FASB 8 became effective. McGraw-Hill/Irwin Copyright ? 2001 by The McGraw-panies, Inc. All rights reserved. 14- 4 Current/Noncurrent Method ? Current assets translated at the spot rate. . DM2=$1 ? Noncurrent assets translated at the historical rate in effect when the item was first recorded on the books. . DM3=$1 Balance Sheet Local Currency Current/ Noncurrent Cash 2,100 DM $1,050 Inventory 1,500 DM $750 Net fixed assets 3,000 DM $1,000 Total Assets 6,600 DM $2,800 Current liabilities 1,200 DM $600 Long-Term debt 1,800 DM $600 Common stock 2,700 DM $900 Retained earnings 900 DM $700 CTA -------- -------- Total Liabilities and Equity 6,600 DM $2,800 McGraw-Hi