Foreign currency translation A1

《Foreign currency translation A1》由会员上传分享，免费在线阅读，更多相关内容在行业资料-天天文库。

1、ForeignCurrencyExchangeInternationalBusinessSchoolACCOUNTINGFORINTERNATIONALOPERATONSTheexhibitbelowshowsthepercentagesofinternationalsalesforthreelargeU.S.companies:CompanyPercentofInternationalSalesCoca-Cola62%IBM57Intel56Accountingforbusinessactivitiesacrossnationalboundariesmake

2、supthefieldofinternationalaccountingACCOUNTINGFORINTERNATIONALOPERATONSThemeasureofonecurrencyagainstanotheriscalledtheforeign-currencyexchangerateUsinganexchangeratetoconvertthecostofanitemgiveninonecurrencytoitscostinasecondcurrencyiscalledatranslationFOREIGNCURRENCIESANDEXCHANGER

3、ATESForeign-CurrencyExchangeRatesatOnePointinTimeCanadaEuropeanCommonMarketFranceGermanyGreatBritainItalyJapanMexicoDollarEuroFrancMarkPoundLiraYenPeso$0.661.060.160.541.590.00050.00860.107CountryMonetaryUnitDollarValueIfanitemcosts200Frenchfrancs,itstranslationtodollarsisfoundbymul

4、tiplyingtheamountinfrancsbytheconversionrate:200Frenchfrancsx$0.16=32FOREIGNCURRENCIESANDEXCHANGERATESTwomainfactorsdeterminethesupplyanddemandforaparticularcurrencyTheratioofacountry’simportstoitsexportsWhenexportsexceedimports,customersmustbuytheunitofcurrencyintheinternationalcur

5、rencymarkettopayfortheirpurchasesFOREIGNCURRENCIESANDEXCHANGERATESThisdemanddrivesuptheprice(theforeignexchangerate)ofacurrencyConversely,asthesupplyofacurrencyincreases,itspricedecreasesTherateofreturnavailableinthecountry’scapitalmarketTherateofreturnavailableinacountry’scapitalma

6、rketsaffectstheamountofinvestmentfundsflowingintothecountryFOREIGNCURRENCIESANDEXCHANGERATESWhenratesofreturnarehigh,internationalinvestorsbuystocks,bonds,andrealestateinthatcountryThisactivityincreasesthedemandforthenation’scurrencyanddrivesupitsexchangerateTheexchangerateofastrong

7、currencyisrisingrelativetoothernations’currenciesTheexchangerateofaweakcurrencyisfallingrelativetoothercurrenciesFOREIGNCURRENCIESANDEXCHANGERATESShippBeltingsellsgoodstoArtesdeMexicoforapriceof1millionpesosonJuly28.Onthatdate,apesowasworth$0.107.OnAugust28,whenthepesoisworthonly$0.

8、104,Shippreceives1m