国际会计第七版英文版课后答案(第六章).doc

Chapter 6 Foreign Currency Translation Discussion Questions Solutions Foreign currency translation is the process of restating a foreign account balance from one currency to another. Foreign currency conversion is the process of physically exchanging one currency for another. In the foreign exchange spot market, currencies bought and sold must be delivered immediately, normally within 2 business days. Thus a Singaporean tourist buying U.S. dollars at the airport before boarding a plane for New York would hand over Singapore dollars and immediately receive the equivalent amount in U.S. dollars. The forward market handles agreements to exchange a fixed amount of one currency for another on an agreed date in the future. For example, a French manufacturer exporting goods invoiced in euros to a Japanese importer on 60- day credit terms would buy a forward contract to sell yen for euros 2 months in the future. Transactions in the swap market involve the simultaneous purchase (or sale) of one currency in the spot market and the sale (or purchase) of the same currency in the forward market. Thus, a Canadian investor wishing to take advantage of higher interest rates on 6-month Treasury bills in the United States would buy U.S. dollars with Canadian dollars in the spot market and invest in the United States. To guard against a fall in the value of the U.S. dollar before maturity (when the U.S. dollar proceeds are converted back to Canadian dollars), the Canadian investor would simultaneously enter into a forward contract to sell U.S. dollars for Canadian dollars 6 months in the future at today s forward exchange rate. The question refers to alternative exchange rates that are used to translate foreign financial statements. The current rate is the exchange rate at the financial statement date. It is sometimes called the year-end or closing rate. The historical rate is the exchange rate at the time of the underlying transaction. The a