Managerial Accounting Chapter 15, Appunti di Contabilità

Scarica Managerial Accounting Chapter 15 e più Appunti in PDF di Contabilità solo su Docsity! CURRENCY EXCHANGE RATE: cost amount needed to purchase 1 unit of domestic currency with a foreign currency. It usually and daily fluctuates depending on the worldwide supply and demand for a particular currency. TRANSLATION OF CURRENCY: 1) Conversion of an amount of $ from domestic currency to another Fcurr S tated Amount ×Exchange Rate (¿Dcurr )=Equivalent ¿ of Dcurr 2) Restate a Dcurr amount into an equivalent amount of foreign currency Dcurr S tated Amount ×Exchange Rate (¿ Fcurr )=Fcurr Stated Amount Currencies can be either  Strong – exchange rate ↑ relative to other curr  more expensive exports than Fimports  Weak – exchange rate ↓ relative to other curr  less expensive exports than Fimports CONSIDERATIONS FOR ACC TRANSACTIONS WITH FCURR: 1. Transaction rice must be translated into Dcurr before recording it 2. Consider whether purchase/ sale is done on account 3. Consider if transaction date  payment date, exchange rate changes ACCOUNTING RECORDS 1) Purchase of foreign merchandise by domestic country – with a payment due Inventory Accounts Payable 2) Foreign exchange rate GAIN for credit purchase  Dcountry will spend less than before Accounts Payable old amount from old exchange rate Cash new amount from new exchange rate Gain on Fluctuations in Foreign Exchange Rates DIFFERENCE OF THE TWO 3) Foreign exchange rate LOSS for credit purchase  Dcountry will spend more than before Accounts Payable old amount from old exchange rate Loss on Fluctuations in Foreign Exchange Rates DIFFERENCE OF THE TWO