International Accounting Essay Example | Topics and Well Written Essays - 1000 words

International Accounting - Essay Example The objectives of this standard are to give a framework on how to incorporate foreign currency transactions and foreign operations or subsidiaries in the financial statement of the parent company. It also shows how to translate financial statement into presentation currency. The most critical thing in this concept is to determine which exchange rate or rates to use and how to account for the exchange difference in the financial statement. The standard requires the entire initial foreign transaction to be recorded on the bases of the prevailing exchange rate, however, it recognizes the use of average exchange rate to numerous transactions occurring during the year (Doupnik & Perera, 2011). The basis for translation can either be current method or temporal method. Temporal method uses the exchange rate that prevailed when the asset and liabilities were acquired. If the assets are based on historical cost the correct exchange rate to use is also historical. Consequently if liabilities a nd assets are based on current cost the rate to use is also the current one. ... Companies listed in Australia stock exchange reflect the present performance thus, they are the most suitable to influence decision making by stakeholders. With application of IAS 21 it is possible to compare company performance in the two stock exchanges. Companies of the same size in Europe are more profitable than Australian companies simply because exchange rate in ? is higher than â‚ ¬. With financial exchange translation there is either again or a loss in the exchange difference. This component is treated as component of finances in the statement of financial position. Works Cited Books, LLC. (2010). International Accounting Standards:International Financial Reporting Standards, International Public Sector Accounting Standards. Memphis, : Books LLC. Choi, F., & Meek, G. K. (2010). International Accounting. New York: PRENTICE HALL. Doupnik, T., & Perera, H. (2011). International Accounting. New York: McGraw-Hill Companies,Inc.,. Melville, A. (2009). International Financial Re porting. New York: Financial Times/Prentice Hall. Previts, G. (2008). Research in Accounting Regulation, Volume 20. Oxford: