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- Denmark has not yet (early 2001) adopted the Euro. Its currency exposure
will be limited to the Euro to the extent that it trades mainly with Euro countries.
- Information on Danish GAAP can be found in E. Comiskey and C. Mulford,
“Comparing Danish Accounting and Reporting Practices with International Account-
ing Standards,” in Advances in International Accounting, ed. Kenneth S. Most
(Greenwich, CT: JAI Press, 1991), 123–142.
- If there were differences between generally accepted accounting principles
in the country of the foreign subsidiary and those in the U.S., then the statements
would first have be adjusted to conform to U.S. GAAP before consolidation could
take place.
- Statement No. 52, Foreign Currency Translation,refers to this alternative pro-
cedure as remeasurement and not translation. However, in the vast majority of cases,
the remeasurement is from the foreign currency to the U.S. dollar. Therefore, remea-
surement produces statements in the U.S. dollar that are ready to be consolidated with
the statements of their U.S. parent. Remeasurement is tantamount to translation.
- It is simply coincidental that a translation gain of $87 resulted under the all-
current translation and a remeasurement loss of $87 resulted from remeasurement
under the temporal method.
- From this example, a fairly obvious case can be made for, other things equal,
locating manufacturing in the same country where sales are made.
- P. Collier, E. Davis, J. Coates and S. Longden, “The Management of Cur-
rency Risk: Case Studies of US and UK Multinationals,” Accounting and Business Re-
search,24 (summer 1990): 208.
- SFAS No. 8, Accounting for the Translation of Foreign Currency Transactions
and Foreign Financial Statements (Stamford, CT: FASB, October 1975).
- C. Houston and G. Mueller, “Foreign Exchange Rate Hedging and SFAS
No. 52—Relatives or Strangers?,” Accounting Horizons,2 (December 1988): 57.
- SFAS No. 133, Accounting for Derivative Instruments and Hedging(Nor-
walk, CT: FASB, June 1998).
- A common feature of derivatives is that they have little or no initial value.
This would not be true in the case of some option contracts where an option premium
is paid, even in the case of at or out-of-the-money options.
- For a reference on these matters, see E. Comiskey and C. Mulford, Guide to
Financial Repor ting and Analysis(New York: John Wiley, 2000), chapters 6 and 7.
- International Accounting Standards Committee, Exposure Draft 32, Compa-
rability of Financial Statements (January 11, 1989).
- Ibid., paragraph 6.
- International Accounting Standards Committee, Statement of Intent, Compa-
rability of Financial Statements (July 1990).
- For a standard-by-standard analysis of the differences between current U.S.
GAAP and IASC standards, see The IASC-U.S. Comparison Project: A Repor t on the
Similarities and Differences between IASC Standards and U.S. GAAP(Nor walk, CT:
FASB, November, 1996).
- To examine the complete reconciliation disclosures of Electricidade de Portu-
gal, go to the SEC Web site (www.sec.gov) and search for the Electricidade filings. The
current reconciliation will be found in the most recent 20-F filing for the company.
