SFAS 52--End to Foreign Currency Translation Controversies?

Date of Submission


Document Type


Degree Name

Master of Science in Accounting




Michael Rolleri


Foreign exchange--Accounting

Call No. at the Univ. of New Haven Library

AS 36 .N29 Acc. 1983 no.4


This study is an attempt to present a comprehensive view on the issue of foreign currency translation. The study will go about this by tracing the history of all the pronouncements by the different accounting bodies in the area of foreign currency translation. Within this context, the pros and cons of the various pronouncements on foreign currency translation will be analyzed. Existing problem areas will be reviewed and potential problem areas pointed out. Highlights of existing controversies will also be objectively scrutinized. Furthermore, special attention will be paid to the conduct of the Financial Accounting Standards Board in handling the controversies emanating from the issuance of their statements.

The first part of this study is devoted to the understanding of the international monetary system and evolution of exchange rates. It is my opinion that an understanding of the issues in foreign currency translation is fully dependent on the understanding of the international monetary system and the subsequent evolution of exchange rates. Thus, one cannot fully comprehend the issues in foreign currency translation without a basic knowledge of "How exchange rates came about." The exchange rate is about the most important ingredient in foreign currency translation and as such deserves a lot of emphasis in this study.

The second part of the study will deal primarily on issues in foreign currency translation, that is, the different pronouncements by the different accounting bodies, the controversies in the accounting for foreign currency translations, and other issues in foreign currency translation.

Due to the fact that the scope of the subject of foreign currency translation is so vast, I would like to point out at this time, that this study will concentrate more on translation of foreign currency financial statements and less on foreign currency transactions. In fact, emphasis on foreign currency transaction will be limited to treatments of foreign exchange gains and losses and other less technical material. All highly technical material on foreign currency transactions are considered outside the scope of this study.