Georgia CTAE Resource Network Curriculum Office, June 2009 To accompany curriculum for the Georgia Peach State Career Pathways June 2009, Dr. Marilynn Skinner

 Accounting standards differ around world  Exchange rates between countries change frequently

 Countries like US have private standard setting bodies  Countries with strongly socialized economies like Germany, government agencies sets standards  International Accounting Standards Committee’s goal to reduce differences in accounting methods

 Accounting for foreign currency exchange transactions  Translation of foreign subsidiary financial statements from foreign currency to reporting currency

 When sales transaction denominated in a foreign currency, cash received will be the foreign currency  Change in exchange rates between date of sale and date of collection will cause foreign currency exchange gain or loss

 Any change in currency exchange gives rise to situation where difference between assets and liabilities does not equal owners’ equity  To reconcile difference, parent reports foreign currency translation adjustment  Reported as part of owners’ equity

 Financial Accounting Standards Board  American Institute of Certified Public Accountants  International Accounting Standards Board