Features OF Standard NO. 52/INTERNATIONAL ACCOUNTING Common 21

The objectives of translation under FAS No. 52 differ substantially from those of FAS No. 8. FAS No. 8 adopted a parent corporation perspective by requiring that foreign currenc financial statements be presented as if all transactions had taken spot in parent currency. Common No. 52 recognizes that both the parent organization plus the neighborhood organization perspectives are valid reporting frameworks. At the international level, the IASB issued a parallel pronouncement, IAS 21, that was recently amended to clarify its needs and to resolve certain implementation issues. Both FAS No. 52 and the existing version of IAS 21 seek to

1. Reflect, in consolidated statements, the economic outcomes and relationships measured within the primary currency in which each consolidated entity does company (its functional currency).



2. Provide information and facts that is definitely usually compatible with the expected economic effects of an exchange rate adjust on an enterprise’s cash flows and equity.

 These objectives are depending on the concept of a functional currency. Recall that the functional currency of an entity would be the currency of the primary economic environment in which it operates and generates cash flows. Furthermore, the functional currency designation determines the choice of translation approach employed for consolidation purposes plus the disposition of exchange gains and losses.