Frederick D. S. Choi

Price-level adjustments and foreign currency translation: are they compatible?

Publisher Summary This chapter discusses price-level adjustments and foreign currency translation. The current–noncurrent method, essentially, translates current assets and current liabilities at rates of exchange prevailing at the balance sheet date while long-term assets, liabilities, and capital are translated at rates prevailing when the assets were acquired, the liabilities incurred, and the capital contributed. Realized gains or losses on foreign exchange typically are charged or credited to operations. Unrealized losses are also charged against current operations whereas unrealized gains are preferably deferred. A variant of this approach, however, is permitted by Accounting Principles Board Opinion No. 6, in which long-term receivables and payables may be translated at the current rate. The monetary–nonmonetary approach distinguishes between monetary and nonmonetary items, which many feel is more appropriate. Under this approach, monetary items are translated at the current rate while nonmonetary items are translated at the historical rate.

Multinational challenges for managerial accountants

Publisher Summary This chapter describes the multinational challenges for managerial accountants. The spread of business beyond national boundaries has fostered mutations of domestic management specialties. They have been necessitated by the additional variables and constraints that typify the international dimension. Foreign currency exchange risks, restrictions on fund remittances across national borders, conflicting national tax laws, and interest-rate differentials in various national financial markets, the global shortage of money capital, and the effects of worldwide inflation on enterprise assets, earnings, and capital costs are just a sample of variables calling for specialized knowledge among financial executives. A direct response to such environmental complexities has been the emergence of the international financial management function. A conference board study reveals that more than half of the companies queried reported having a specially designated executive concerned solely with financial management of international operations. A risk dimension unique to international business is the risk of loss as a result of changes in the value of national currencies in which financial transactions are denominated.

The Management of International Reporting Standards

In this article, I examine current financial reporting policy initiatives to improve the access of international companies to the U.S. capital market, one of the largest and lowest cost source of equity funding for non-U.S. registrants. The conventional wisdom underlying the management of international reporting standards is that active pursuit of a unified set of accounting and reporting standards is desirable (Sharpe 1999). The unanswered question at this point is, what constitutes an internationally-acceptable threshold? The major point of this article is the following. If the quest for an international reporting benchmark is to amount to something other than a theoretical goal, policymakers should embrace the realities of the marketplace.

Teaching International Finance–An Accountant's Perspective

International finance has developed into a recognized field of study within the broader discipline of international business. This has occurred because increasing commitments of companies to international operations have forced more and more financial managers to face a number of problems and issues not found in a strictly domestic setting. Foreign currency exchange risks, exchange controls, restrictions on the flow of funds, diverse accounting and taxation systems, host government interference, and the effects of worldwide inflation on enterprise assets, earnings, and capital costs are just a sample of the variables calling for specialized knowledge.