Accoridng to the FASB, The assets, liabilities and operations of a foreign entity shall be measured...

Accoridng to the FASB, The assets, liabilities and operations of a foreign entity shall be measured using the functional currency of that entity. Should firms use a single functional currency to measure international operations? What are the benefits and problems with this? Argue for both sides

Solutions

Expert Solution

The functional currency is the reporting currency of the entity where such entity is headquartered. I believe the firms can use a single functional currency to measure internation operations. However, records must be kept in different currencies for required reportings. The benefits and problem s associated with this are discussed below:

Benefit:

1. Nowadays the business is expanded over multiple countries and hence trnsactions happen in multiple currencies. Hence it gets really difficult unless one single functional currency is followed.

2. Ease of operation

3. Single FASB provision for all organisations.

Problems:

1. Reporting in different currencies not available. There are multiple audits and reporting requirements in place in different countries and the transaction information in multiple currencies might not be readily available.

2. Further work required to convert statements into other currencies.

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

How shall an entity subsequently measure financial liabilities? Is IFRS measurement of financial liabilities similar to...

How shall an entity subsequently measure financial liabilities? Is IFRS measurement of financial liabilities similar to that of U.S. GAAP? Also briefly describe the requirements regarding an option to designate a financial liability at fair value through profit and loss. Does U.S. GAAP allow fair value option for financial assets and liabilities? What is “own credit” issue related to financial liabilities measured at fair value through profit and loss? How does IFRS 9 address this “own credit” issue?

The FASB requires that deferred tax assets and liabilities not be discounted. In at least three...

The FASB requires that deferred tax assets and liabilities not be discounted. In at least three paragraphs, support one of the positions presented below. You should use references to reference material, as necessary. In 3 paragraphs Position: Present arguments against discounting deferred tax liabilities.

The FASB requires that deferred tax assets and liabilities not be discounted. In at least three...

The FASB requires that deferred tax assets and liabilities not be discounted. In at least three paragraphs, support the position presented below. You should use references to reference material, as necessary. Position: Present arguments against discounting deferred tax liabilities.

The Portfolio Balance Model assumes a country has foreign denominated assets, but no foreign denominated liabilities.

The Portfolio Balance Model assumes a country has foreign denominated assets, but no foreign denominated liabilities. How do you think the implications would change if the country had foreign denominated liabilities, but no foreign denominated assets? What implication may this have for the effect of portfolio rebalancing on exchange rate movements for countries with positive and negative net international investment positions?

Discuss why the FASB issued ASU2016-2 and describe how leased assets and lease liabilities are reported...

Discuss why the FASB issued ASU2016-2 and describe how leased assets and lease liabilities are reported on the balance sheet and the income statements based on ASU2016-2. Your description should include the reporting of the leased assets and lease liabilities on the balance sheet and the lease expenses on the income statement.

Suppose that half of U.S. foreign assets are denominated in euros, while all of American liabilities...

Suppose that half of U.S. foreign assets are denominated in euros, while all of American liabilities to foreigners are denominated in dollars. Suppose that at the beginning of the year, U.S. foreign assets were valued at 100% of U.S. GDP, while American liabilities to foreigners were valued at 150% of GDP. By how much and in what direction would a 10% depreciation of the dollar relative to the euro affect the U.S. net international investment position? Suppose that at the...

In 2009, US foreign assets was 129 percent of GDP and its liabilities was 148 percent....

In 2009, US foreign assets was 129 percent of GDP and its liabilities was 148 percent. Suppose that 70 percent of U.S. foreign assets are denominated in foreign currencies, but that all U.S. liabilities to foreigners are denominated in dollars (these are approximately the correct numbers). In 2009, U.S. GDP was around $14.4 trillion. Compute the effect of a 10% USD depreciation on US foreign assets, US foreign liabilities and US net foreign wealth position (in USD). Compute the effect...

1)state and explain what constitutes assets and liabilities in commercial banks and how profitability is measured.(...

1)state and explain what constitutes assets and liabilities in commercial banks and how profitability is measured.( 8 marks) 2)explain the following term, clearly stating the impact they have on the provision of financial services. information asymmetry,adverse selection,moral hazard. 3) comment on the characteristics following the type of financial intermediaries and how there services may defer from other financial intermediaries. investment banks,insurance companies,pension funds,credit unions.

1)state and explain what constitutes assets and liabilities in commercial banks and how profitability is measured.(...

Central Bank Balance Sheet Assets Liabilities Foreign assets $1,000 Deposits held by private banks $500 Domestic...

Central Bank Balance Sheet Assets Liabilities Foreign assets $1,000 Deposits held by private banks $500 Domestic assets $1,500 Currency in circulation $2,000 Please write the new balance sheet if 1. The bank sells $100 worth of foreign bonds for domestic currency. 2. The bank carries out a sterilized transaction by selling $100 of foreign assets 3. What should the bank do if its intent were to acquire more foreign assets but keep the money supply constant? How would the...

Subjects