Accounting policies for exchange gains and losses on long‐term monetary items

Peter H. Eddey*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

2 Citations (Scopus)

Abstract

Accounting standards and exposure drafts on foreign currency translation have differed in their recommended treatment of unrealised exchange gains and losses on long‐term monetary assets and liabilities of domestic firms denominated in foreign currencies. This paper compares the immediate recognition method (U.S. and U.K.) to the defer and amortise method (Australia and Canada) with respect to their effects on net income, asset and liability measurement. Reasons why management will be concerned with the financial statement effect of exchange rate changes are advanced and these, together with the empirical analysis of the competing accounting methods, help explain the evident support the Australian corporate sector has shown for the defer and amortise method.

Original languageEnglish
Pages (from-to)19-40
Number of pages22
JournalAccounting & Finance
Volume25
Issue number2
DOIs
Publication statusPublished - 1985

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