外币报表折算方法比较分析Types of foreign currency translation methods.ppt

of Foreign Currency Translation Methods As we know, there is no international uniform customs in executing the foreign currency financial statement translation method up to now and the different translation methods have their own advantages and disadvantages. So today let’s make a deep study on the foreign translation methods and their application . to have a better knowledge of foreign currency translation methods. exploring a concrete applying method that meets China’ s national situations. What I will talk about ? Part One Current-noncurrent Method Balance Sheet: Current assets and liabilities : current rate Noncurrent assets and liabilities : historical rate Income Statement: Revenues and expenses (excluding depreciation and amortization) : average rates. Depreciation and amortization: charges at historical rates in effect when related assets are acquired. The key of this method is to make a distinction between current and noncurrent items. Current-noncurrent Method Limitations: 1.the dealing of Inventories : be equally exposed to exchange risk 2.the dealing of L-T items : shifts the impact of fluctuating currencies to the year of settlement. 3. Current and noncurrent definitions are merely a classification scheme, not a conceptual justification of which rates to use in translation. Advantages: widely used in the analysis of working capital. United States: In the 1930s: be widely used until the 1970s: be replaced by temporal method. But there are still some countries use this method. Monetary-Nonmonetary Method Balance Sheet: Monetary assets and liabilities: current rate Nonmonetary assets and liabilities: historical rate Income Statement: Revenues and expenses (excluding depreciation and amortization) : average rate Depreciation and amortization: charges at historical rates in effect when related assets are acquired. The key of this method is to make a distinction between monetary and non