Foreign Currency Financial Reporting from Euro to Yen to Yuan: A Guide to Fundamental Concepts and Practical Applications
Introduction to Foreign Currency and Exchange Rates.
Who You Are.
What You Know.
A Changing Environment.
Certainty in Uncertain Times.
Part I: The Basics.
Chapter 1: Isn't Currency Conversion Just Multiplication?
The First Complication: It's Not Just Multiplication.
From Where Do Exchange Rates Come?
A Second Complication: Triangulation.
Triangulation with Cross Rates.
Currencies and Exchange Rates: Highlights of Their Relevance and Recent History.
Burgers and Currency.
Chapter 2: Exchange Rate Tables: Getting from Yen to Euros without Losing Your Way.
The Foundation and Caveats.
Terms and Terminology.
Triangulation and Cross Rates – Redux.
Exchange Rate Tables.
Keep It Simple.
Chapter 3: Approximation: When Mathematics, Computer Science, and Regulations Converge.
The Original Data: Accurate and Precise.
Significant Digits and Scientific Notation.
What Division Means for Computers.
Precision with Floating Point Data.
Accuracy, Precision, and Credibility.
Part II: Key Concepts and Authoritative Standards.
Chapter 4: What's in a Name?
A Brief Background.
IFRS Predominance with an FASB Pedigree.
The Economic Essence: From Names to Definitions.
All the Rest.
Chapter 5: The Gold Standard: Following the Standard for Fiat Currencies.
The Gold Standard for Financial Reporting.
IAS21 and ASC 830: Converged, But Not Identical.
Translation – Not Conversion.
Translation of Income and Expense.
Translation 1: Basic.
Translation 2: Intermediate.
Chapter 6: They're Not Synonyms: Transaction to Translation, Revaluation to Remeasurement.
Transactions and Translation.
Transactions in a Foreign Currency.
Reporting at Balance Sheet Dates.
Best of Intentions: Companies' Divergent Paths.
Changing Functional Currency.
Knowledge Worth Having.
Part III: Practical Applications (and More Concepts).
Chapter 7: The Intersection: Interplay of Mathematics, Exchange Rates, Accounting Standards, Economics, and Time.
Time Concepts: PA, PIT, and POT.
The Missing Piece.
Equity and Complex Rates.
Cash Flow Affected by Exchange Rates.
Negative Exchange Rates.
Make the Transformation.
Chapter 8: Practical Knowledge: Things You Should Know.
Exchange Rate Impact: Basic Information.
Analyzing the Exchange Rate Impact.
Constant Currency: A Second Fix.
Improving Constant Currency.
Analysis and Automation.
Multiple Exchange Rate Scenarios.
Constant Year: A Third Fix.
Looking Forward: Beyond the Constants.
Practical Examples or Cautionary Tales.
Financial Reporting and Management Reporting.
Chapter 9: Practical Knowledge: Things You Can Learn.
A Problem at the Source.
Change It – Use It – Analyze It.
Crossing Zero: A Change in Sign.
The School of Experience.
Chapter 10: Cumulative Translation Adjustment: The Algebraic Plug.
Baggage from the Past: Accumulating the Translation Adjustment.
Translation Adjustment and Intra-Group Monetary Transactions.
Cumulative Translation Adjustment is not Remeasurement.
A Little Fun with CTA.
Chapter 11: The Residual.
Devaluations and Revaluations.
Non-monetary Assets (Inventory) Measured in a Foreign Currency.
Disposal of a Foreign Operation.
A Simple Forward Contract: Hedging.
Conclusion: Re-invent the Triangle: Innovate and Advocate.
Appendix A: World Currency Formats and ISO 4217 Information.
Appendix B: Useful Links, and Why They’re Useful.
Appendix C: Exchange Rate Requirements.
Definition of Actual Rates.
Definition of Constant Currency Rates.
Definition of Forecast Rates.
Definition of Views.
Definition of High (USH) and Low (USL) Rates.
Definition of Rates in the Tables.
About the Author.