Welcome to the Investors Trading Academy talking glossary of financial terms and events.
Our word of the day is “FASB No. 8”.
An official opinion by the Financial Accounting Standards Board on how to report a transaction. FASB statements set standards for the accounting industry and help establish uniform practice insofar as it is possible.
U.S. accounting standard that requires US firms to translate their foreign affiliates’ accounts by the temporal method; that is, reporting gains and losses from currency fluctuations in current income. It was in effect between 1975 and 1981 and became the most controversial accounting standard in the US. It was replaced by FASB No. 52 in 1981.
This Statement requires that all amounts measured in a foreign currency be translated at the exchange rate in effect at the date at which the foreign currency transaction was measured. All exchange gains and losses were required to be included in income in the period in which they arose, i.e., when the rates changed.
By Barry Norman, Investors Trading Academy – ITA
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