Compliance Conundrum

Accounting Technology, August, 2007

As if companies didn't have enough to worry about making sure they are converting currencies appropriately so they don't lose money, they must also adhere to requirements set forth by the Financial Accounting Standards Board.

FASB 52 sets standards for foreign currency translations which are designed to "provide information that is generally compatible with the expected economic effects of a rate change on an enterprise's cash flows and equity," according to the board, which set these standards in 1981. J. Carlton Collins, CPA, an accounting software analyst and president of ASA Research, explains how the standards work using the following example as it relates to receivables valuation: Let's suppose a U.S. company invoices a Japanese company for 12,140,000 yen, or $100,000...

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