Fundamentals of Advanced Accounting
6th Edition
ISBN: 9780077862237
Author: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupnik
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Question
Chapter 7, Problem 1Q
To determine
Identify the concept explaining two-transaction perspective for foreign currency transactions.
Expert Solution & Answer
Answer to Problem 1Q
Accrual approach underlies the two-transaction perspective for foreign currency transactions.
Explanation of Solution
When a trade is entered by the two parties from two different counties, the currency in which the transactions are to be recorded or settled needs to be decided first. While there is any change in the foreign currency exchange rate, the gain or loss in net income needs to be recognized in the financial statements in the period in which such change in exchange rate occurs. This concept is called the accrual approach or the two-transaction perspective for foreign currency transactions.
Want to see more full solutions like this?
Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Students have asked these similar questions
What concept underlies the two-transaction perspective in accounting for foreign currency transactions?
what are implications for analysis of financial statements that result from the accounting for foreign currency translation?
what is Accounting for Foreign Currency Transactions
Chapter 7 Solutions
Fundamentals of Advanced Accounting
Ch. 7 - Prob. 1QCh. 7 - Prob. 2QCh. 7 - What factors create a foreign exchange gain on a...Ch. 7 - In what way is the accounting for a foreign...Ch. 7 - Prob. 4QCh. 7 - How does a foreign currency option differ from a...Ch. 7 - Prob. 6QCh. 7 - Why would a company prefer a foreign currency...Ch. 7 - How do companies report foreign currency...Ch. 7 - How does a company determine the fair value of a...
Ch. 7 - What is hedge accounting?Ch. 7 - Prob. 11QCh. 7 - What are the differences in accounting for a...Ch. 7 - What are the differences in accounting for a...Ch. 7 - What are the differences in accounting for a...Ch. 7 - Prob. 15QCh. 7 - Prob. 1PCh. 7 - Prob. 2PCh. 7 - Prob. 3PCh. 7 - Prob. 4PCh. 7 - Prob. 5PCh. 7 - Prob. 6PCh. 7 - Prob. 7PCh. 7 - Prob. 8PCh. 7 - Prob. 9PCh. 7 - Prob. 10PCh. 7 - Prob. 11PCh. 7 - Prob. 12PCh. 7 - On March 1, Pimlico Corporation (a U.S.-based...Ch. 7 - Prob. 14PCh. 7 - Prob. 15PCh. 7 - Prob. 16PCh. 7 - Prob. 17PCh. 7 - Prob. 18PCh. 7 - Prob. 19PCh. 7 - Prob. 20PCh. 7 - Prob. 21PCh. 7 - Prob. 22PCh. 7 - Prob. 23PCh. 7 - Prob. 24PCh. 7 - Prob. 25PCh. 7 - Prob. 26PCh. 7 - Prob. 27PCh. 7 - Prob. 28PCh. 7 - Prob. 29PCh. 7 - Prob. 30PCh. 7 - Prob. 31PCh. 7 - Prob. 32PCh. 7 - On June 1, Alexander Corporation sold goods to a...Ch. 7 - Prob. 34PCh. 7 - Prob. 35PCh. 7 - Prob. 36PCh. 7 - Prob. 37PCh. 7 - Prob. 38PCh. 7 - Prob. 39PCh. 7 - Prob. 40PCh. 7 - Prob. 41PCh. 7 - Prob. 42PCh. 7 - RESEARCH CASEINTERNATIONAL FLAVORS AND FRAGRANCES...Ch. 7 - Prob. 2DYSCh. 7 - Prob. 4DYSCh. 7 - COMMUNICATION CASEFORWARD CONTRACTS AND OPTIONS...
Knowledge Booster
Similar questions
- What are the consequences of accounting for foreign currency translation on financial statement analysis?arrow_forwardIn accounting for foreign currency transactions, which of the following approaches is used in the United States?a. One-transaction perspective; accrue foreign exchange gains and losses.b. One-transaction perspective; defer foreign exchange gains and losses.c. Two-transaction perspective; defer foreign exchange gains and losses.d. Two-transaction perspective; accrue foreign exchange gains and losses.arrow_forwardWhich of the following combinations correctly describes the relationship between foreign currency transactions, exchange rate changes, and foreign exchange gains and losses?arrow_forward
- Choose the correct. In accounting for foreign currency transactions, which of the following approaches is used in the United States?a. One-transaction perspective; accrue foreign exchange gains and losses.b. One-transaction perspective; defer foreign exchange gains and losses.c. Two-transaction perspective; defer foreign exchange gains and losses.d. Two-transaction perspective; accrue foreign exchange gains and losses.arrow_forwardWhat concept underlies the two-transaction perspective in accounting for foreign currency transactions? a. treats imports and exports as two separate transactions. b. Foreign Exchange Gains and Losses. c. The Effects of Changes in the world Economy. d. Treats the export sale and the subsequent collection of cash as two separate transactions.arrow_forward
arrow_back_ios
arrow_forward_ios
Recommended textbooks for you
- Intermediate Financial Management (MindTap Course...FinanceISBN:9781337395083Author:Eugene F. Brigham, Phillip R. DavesPublisher:Cengage LearningFinancial Reporting, Financial Statement Analysis...FinanceISBN:9781285190907Author:James M. Wahlen, Stephen P. Baginski, Mark BradshawPublisher:Cengage Learning
- Century 21 Accounting Multicolumn JournalAccountingISBN:9781337679503Author:GilbertsonPublisher:Cengage
Intermediate Financial Management (MindTap Course...
Finance
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Cengage Learning
Financial Reporting, Financial Statement Analysis...
Finance
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:Cengage Learning
Century 21 Accounting Multicolumn Journal
Accounting
ISBN:9781337679503
Author:Gilbertson
Publisher:Cengage