Translating foreign financial statements involving the euro

With the arrival of the euro on January 21, foreign exchange transactions and translation of foreign financial statements between the legal currencies and the US dollar have been altered substantially. The conversion rates of the legacy currencies are fixed in terms of the euro and no longer float a...

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Bibliographic Details
Published in:The CPA journal (1975) 1999-08, Vol.69 (8), p.52
Main Authors: Quinn, Tina Steward, Smith, Keith W
Format: Article
Language:English
Subjects:
Accounting
Accounting and auditing
American dollar
Balance sheets
Changes
Conglomerate corporations
Consolidated financial statements
Currency transactions
Economic aspects
Euro
Euro (Currency)
European Monetary Union
Eurozone
Financial statements
Foreign exchange rates
Foreign exchange translations
Foreign subsidiaries
Holding companies
Impact analysis
Monetary unions
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Summary:With the arrival of the euro on January 21, foreign exchange transactions and translation of foreign financial statements between the legal currencies and the US dollar have been altered substantially. The conversion rates of the legacy currencies are fixed in terms of the euro and no longer float against the dollar. Only the euro floats against other currencies with a published exchange rate. By July 1, 2002, the changeover will be complete: The euro will be the only legal tender in euro-zone countries. Through its Emerging Issues Task Force, FASB has considered some of the accounting issues related to the introduction of the euro. EITF Topic D-71 considers the changeover to the euro a change in financial currency but says that the cumulative translation adjustment account should not be changed until there is a disposition of the investment. The issue of change in functional currency has also been addressed by the Treasury Department in Temporary Regulations section 1.1001-5t.
ISSN:0732-8435