tailieunhanh - Ebook International financial management (6th edition): Part 2

(BQ) Part 2 book "International financial management" has contents: International bond market, international equity markets, interest rate and currency swaps, multinational cash management, international trade finance, multinational cash management,.and other contents. | 10 Management of Translation Exposure Translation Methods THIS CHAPTER CONCLUDES our discussion of foreign Current/Noncurrent Method Monetary/Nonmonetary Method Temporal Method Current Rate Method Financial Accounting Standards Boar:d Statement 8 . Financial Accounting Standards Board Statement 52 The Mechanics of the FASB 52 Translation Process Highly Inflationary Economies International Accounting Standards CASE ApPLICATION: Consolidation of Accounts according to FASB 52: The Centralia Corporation Management of Translation Exposure Translation Exposure versus Transaction Exposure Hedging Translation Exposure Balance Sheet Hedge Derivatives Hedge Translation Exposure versus Operating Exposure Empirical Analysis of the Change from FASB 8 to FASB 52 Summary KeyWords Questions Problems Internet Exercises MINI CASE: Sundance Sporting Goods, Inc. References and Suggested Readings Current/Noncurrent Method 248 exchange exposure and management. In it we discuss translation exposure. Translation exposure, also frequently called accounting exposure, refers to the effect that an unanticipated change in exchange rates will have on the consolidated financial reports of a MNC. When exchange rates change, the value of a foreign subsidiary's assets and liabilities denominated in a foreign currency change when they are viewed from the perspective of the parent firm. Consequently, there must be a mechanical means for handling the consolidation process for MNCs that logically deals with exchange rate changes. This chapter presents the basic methods of handling translation adjustments. We present an example of a simple consolidation using the different methods for handling translation adjustments so that the effects of the various methods can be compared. Special consideration is given to recently prescribed methods of the Financial Accounting Standards Board (FASB), the authoritative body in the United States that specifies accounting policy for . business firms .