FINANCIAL REPORTING AND PRICE CHANGES

A. Understand why the financial report has the potential to mislead during the period of price changes.
During periods of inflation, asset values ​​are carried at acquisition cost less initially reflect its current value (the higher). This distorts the measurement inaccuracies  
(1) financial projections based on historical time series of data 
(2) the budget is the basis of performance measurement and 
(3) performance data can not isolate the effect of inflation that can not be controlled. Earnings are valued more in turn will lead to:
a. The increase in the proportion of tax
b. Demand more dividends than shareholders
c. Salaries and demand higher wages than the workers.
d. Adverse action of the host country (such as the taxation of a huge advantage).
Failure to adjust the company's financial data to changes in the monetary unit's purchasing power also creates difficulties for the reader to interpret financial statements and compare the operating performance of companies that reported. In periods of inflation, revenues are generally denominated in the general purchasing power is lower (ie the purchasing power of the present period), which is then applied against the related expenses. Conventional accounting procedures also ignore the purchasing power gains and losses arising from the ownership of cash (equivalent) during the period of inflation.
Therefore, to explicitly recognize the effect of inflation is useful to do because:
1. The effect of price changes in part depend on the transaction and the circumstances facing the company.
2. Manage the problems caused by price changes depend on an accurate understanding of the problem.
3. Reports from managers about the problems caused by price changes much easier to believe when businesses publish financial information that addresses these problems.

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B. Knowing inflation accounting terms and understand the influence of price adjustments on the financial statements.

C. Determine differences in current cost accounting model and the conventional.

Differences in the cost accounting model and the conventional current Historical Cost Financial Statements Statements of Financial Position 
1. Amount in the statement of financial position are not expressed in the units of measurement are now at the end of the reporting period, are restated by applying a general price index. 
2. Items of monetary restated because they are expressed in monetary units is now at the end of the reporting period. Monetary posts are owned and the money to be received or paid in cash. 
3. Assets and liabilities, with the agreement, which is connected with changes in prices such as index linked bonds and loans, adjusted in accordance with the agreement to ensure the balance at the end of the reporting period. The posts are recorded at amounts have been adjusted in the statement of financial position are restated.   nonmonetary. Some noted the number of non-monetary post is now at the end of the repo
4. All assets and other liabilities are
rting period, such as net realizable value and fair value, then the post is not restated. All assets and liabilities to other non-monetary restated.  
5. Most of the non-monetary items carried at cost or cost less depreciation. Therefore, these items are stated at the amount present on the date of acquisition. Acquisition cost, or cost less depreciation, which are presented back to each item is determined by applying the change in the general price index from the date of acquisition until the end of the reporting period on a historical cost and accumulated depreciation. For example, fixed assets, inventories of raw materials and merchandise, goodwill, patents, trademarks and similar assets are restated from the date of purchase. Supply of intermediate goods and finished goods are restated from the date of the purchase cost and conversion costs.  
6. Detailed record of the date of acquisition of units of fixed assets may not be available or can not be estimated. In rare circumstances, it may be necessary, in the first period to implement this statement, to use an independent professional assessment of the value of such units as the basis for the presentation of the return.  
7. General price index may not be available for a period of time restate fixed assets required by this Statement. Under these circumstances, an entity may need to use the basic estimates, for example, the transfer rate between the functional currency and foreign currencies are relatively stable. 
8. Some noted the number of non-monetary post is now on a date other than the date of acquisition or date of statement of financial position, for example, fixed assets have been revalued in the previous date. In this case, the carrying amount restated from the date of revaluation.  
9. Restated amounts of non-monetary items is reduced, in accordance with relevant GAAP, when the amount exceeds the recoverable amount. For example, the amount of fixed assets, goodwill, patents and trademarks presented again reduced to recoverable amount and restated amount of inventory reduced to net realizable value.  
10. Investee is recorded using the equity method may make a report in the currency hyperinflation economy. Statement of financial position and reports comprehensive income of the investee are restated in accordance with this Statement for the investor counting on net assets and profit and loss. When the financial statements of the investee are restated denominated in foreign currencies, the financial statements are translated at the closing exchange rate.  
11. Effect of inflation is usually recognized in borrowing costs. It is not appropriate to restate the capital expenditure financed by borrowing and to capitalize the borrowing costs to compensate for inflation over the same period. Part of this borrowing costs are recognized as an expense in the period when the cost occurs. 12. An entity may acquire assets in a deal that allows entities to defer payment without incurring an explicit interest charge. When an entity is not practical to determine the amount of interest, then such assets are restated from the date of payment and not the date of purchase.  
13. At the beginning of the first period of application of this, a component of equity, except retained earnings and revaluation surplus, are restated using general price index from the date of the equity component is contributed or appear. Revaluation surplus that arose in previous periods is eliminated. Balance restated earnings from all other amounts in the statement of financial position 
14. At the end of the first period and subsequent periods, all components of equity are restated by applying a general price index from the beginning of the period or the date of contribution, if more recent. Shift in owners' equity during the period disclosed in accordance with IAS 1 (revised 2009) Presentation of Financial Statements. Comprehensive Income Statement 
15. This statement requires that all items in comprehensive income statement are expressed in units of measurement are now at the end of the reporting period. Therefore, the entire amount necessary to implement the changes and display it in the general price index from the date income and expenses were initially recorded in the financial statements. Gain or Loss on Net Monetary Position 
16. In an inflationary period, if the entity has a monetary assets exceed monetary liabilities, the entity's purchasing power decreases, and if the entity has a monetary liabilities exceed monetary assets, then the purchasing power is increasing all the entities connected to a price level. Monetary position gain or loss is the difference in net non-monetary assets, and equity items in the comprehensive income statement are restated and the adjustment of index linked assets and liabilities. Gains or losses can be estimated using changes in the general price index to the weighted average over the period of the difference between monetary assets and monetary liabilities.  
17. Gains or losses net monetary position is included in the income statement. Adjustments to assets and liabilities linked to price changes in the agreement) in accordance with paragraph 13, with the offsetting gain or loss on net monetary position. Income and other expenses, such as income and interest expense and foreign exchange differences related to investments or loans, are also associated with the net monetary position. Although the post is separately disclosed, it can be helpful if the post is presented along with the gain or loss on net monetary position in the comprehensive income statement. Now the Cost of Financial Statements Statements of Financial Position 
18. Items that are presented at current cost are not restated because they are expressed in units of measurement are now at the end of the reporting period. Elsewhere in the restated statement of financial position in accordance with paragraphs 11 to 24. Comprehensive Income Statement 
19. Comprehensive income statement using the current cost, before restatement, generally reports costs are now at the time of the underlying transactions or events. Therefore, the entire amount is to be presented again in the unit of measurement is now at the end of the reporting period by using a general price index. Gains or losses Net Monetary Position 
20. Gains or losses are recorded net monetary position in accordance with paragraphs 26 and 27. Statement of Cash Flows 
21. This statement requires that all items in the cash flow statement are expressed in units of measurement are now at the end of the reporting period. Related Figures 
22. Corresponding number in the previous reporting period, whether based on a historical cost approach or a current cost approach, are restated using general price index, so the comparative financial statements are presented in units of measurement are now at the end of the reporting period. Information disclosed in connection with previous periods is also expressed in units of measurement are now at the end of the reporting period. For the purpose of presenting comparative amounts in the presentation of foreign currency, applied IAS 10 (revised 2010): Effects of Changes in Foreign Exchange Rates paragraph 42 (b) and 43. Consolidated Financial Statements 
23. The parent entity financial reports in the currency hyperinflation economy may have subsidiaries that also make a report in the currency hyperinflation economy. Entity's financial statements are restated the child's needs by using the general price index of the country whose currency is reported prior to inclusion in the consolidated financial statements issued by the parent entity. When a foreign subsidiary is an entity, then the restated financial statements are translated at the closing exchange rate. Entity's financial statements were reported in children who are not hyper-inflation economy currencies are treated according to Foreign Exchange. 
24. If financial statements with a different end of the reporting period are consolidated, all monetary and nonmonetary post need to be restated in the unit of measurement is now on the consolidated financial statements.

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D. Explain the differences of inflation accounting in the U.S., Britain, and Brazil.

Differences in inflation accounting in the United States, Britain, Brazil 1. Country United States In 1979, the FASB issued Statement of Financial Accounting Standards / SFAS No.33, entitled "Financial Reporting and Changing Values" statement requires U.S. companies that have supply and aktifa still worth more than $ 125 million or assets of more than $ 1 billion, for the past 5 years trying to make disclosure of constant purchasing power as the basic framework of the historical cost basis of measurement for the primary financial statements. Many users and compilers of financial information in accordance with SFAS No.33 found that: a. Double that required disclosure of FASB confusing. b. Double the cost of preparation of disclosure is too large. c. Disclosure of purchasing power historical cost is not too useful when compared to the current cost. Finally issued SFAS N0.88 to help companies that reported the effect of statements on the price change and become the starting point of future inflation accounting standards.

Reporting company is encouraged to disclose the following information for each of the last 5 years: a. Net sales and other operating income. b. Profit from opersi running on current cost basis. c. Increases or decreases in current cost or recoverable amount. d. Each agregrat foreign currency translation adjustments based on current cost, arising from the consolidation process. e. Net assets at year end decreased current cost basis. f. Earnings per share on the basis of current cost g. Dividend per common share h. Year-end market price of common stock perlembar i. Level of consumer price index used to measure the return of opersi running. SFAS No.88 disclosure guidelines also include overseas operations included in the consolidated statements of U.S. companies holding company which, engadopsi dollar as the functional currency for its foreign operations measure looked at the operations from the perspective of the parent company's currency.

As a result the accounts of the operation should be translated into dollars, adjusted for U.S. inflation. Multinational companies are adopting local currency as the functional currency for most of its foreign operations in light of the local currency. FASB is allowing companies to use the present re-translation method or adjust to the foreign inflation and then do a translation into U.S. dollars. Thus, the adjustment of the data to reflect the current cost inflation index can be based on the general price level of the U.S. or abroad.

2. The UK UK Accounting Standards Committee / ACS issued a "Statement of Standard Accounting Practice 16 / SSAP," Accounting for Costs Now "for a trial period of 3 years in March 1980. Although SSAP 16 was canceled in 1988, the methodology is recommended for companies that voluntarily report accounts-their account adjusted for inflation. Differences SSAP 16 with SFAS 33 is a. If the U.S. standard requires constant cost accounting and now, SSAP 16 only adopt the current cost for external reporting. b. If the adjustment of U.S. inflation based on the income statement, expense report in the UK now mengwajibkan both income statements and balance sheets are now charged, along with explanatory notes. c British Standards allow reporting options:

• Presenting the accounts as a current cost basis financial statements with supplementary accounts of historical cost.
• Presenting the accounts of historical cost as the basis of financial statements with supplementary accounts of current cost.
• Presents the current cost accounts as the accounts satuny dilengkanpi with enough historical cost information.

With treatment of gains and losses relating to monetary items, FAS 33 menharuskan separate disclosure for each digit. SSAP 16 mengaharuskan two numbers that both reflect the influence of specific price changes, ie a. Monetary working capital adjustment (Monetary Working Capital Adjustment) / MWCA Acknowledging the influence of price changes specific to the total amount of working capital used by the company in its operations. b. The adjustment mechanism Allows the effect of price changes specific to non-monetary assets of the company.

3. Brazilian state Although no longer required the recommended inflation accounting in Brazil today reflects two groups of reporting options, the Brazilian Corporate Law and Capital Market Supervisory Commission of Brazil. Inflation adjustment in accordance with the law firm presenting the accounts re-permanent assets and shareholders' equity by using a price index which is recognized by the federal government to measure the local currency devaluation.

Inflation adjustment to permanent assets and shareholders' equity are presented net of the amount over that disclosed separately in the profit gain or loss is now as monetary correction. Price-level adjustments to equity shareholders are shareholders in the amount of investment which should grow to awalperiode not tertingla with inflation. Adjustments to assets permanently smaller than equity adjustments cause loss of purchasing power that reflects the risk faced by the company on the net monetary assets.

SOURCE Choi D.S. Frederick & Meek K. Gary. , 2005. INTERNATIONAL ACCOUNTING, BOOK 1 ISSUE 5. New York: Four Salemba. http://khair2120.wordpress.com/category/akuntansi-internasional/


E. Understanding of financial reporting in hyperinflation economy.

Statement of Financial Accounting Standard 63: Financial Reporting in Hyperinflation Economic consists of paragraphs 1-40. The entire paragraph has the power to set the same. Paragraphs which are printed in bold and italics to set the main principles. IAS 63 should be read in the context of goal setting and the Framework of the Preparation and Presentation of Financial Statements. IAS 25 (revised 2009) Accounting Policies, Changes in Accounting Estimates and Errors provides a basis to select and apply accounting policies when no explicit guidance. This statement is not intended to apply to elements that are not material 01. This statement is applicable to the financial statements, including the consolidated financial statements of each entity that functional currency is the currency of an economy experiencing hyperinflation (hereinafter referred to as hyper-inflation economies).
02. Hyperinflation in the economy, reporting of operating results and financial position in the local currency without restatement is not useful. Money loses purchasing power such that the ratio of the amounts of transactions and other events from time to time, even within the same accounting period, be misleading.
03. This statement does not set at a certain level of inflation is considered hyperinflation. Consideration is required in determining when restatement of financial statements need to be done in accordance with this statement. Characteristics of the economic environment of a country which is an indication that the country is experiencing hyperinflation, among others: (a) inhabitants prefer to store their wealth in the form of non-monetary assets or in a foreign currency is relatively stable. Amount of local currency held immediately invested to maintain purchasing power; (b) the population consider the monetary amount is not in the local currency but in foreign currencies are relatively stable. The prices may dikuotasikan in foreign currency; (c) the prevailing price in the sales and purchases on credit is determined by inserting a factor expected loss of purchasing power during the credit period, even if the short loan period, (d) interest rates, wages and prices associated with the price index, and (e) the cumulative inflation rate over three years approaches or exceeds 100%.
04. All entities that prepare financial statements in the currency of the same hyper-inflation economies are encouraged to apply this statement from the same date. However, this statement is applied to the financial statements of each entity since the beginning of the reporting period when the entity identifies the existence of hyperinflation in the country whose currency is used by such entities to prepare financial statements.
05. Price change from time to time as a result of political influence, economic, social and general or specific. Specific influences such as changes in supply and demand and technological changes may cause individual prices increase or decrease significantly and independently from one another. In addition, the general effects can cause changes in general price levels and purchasing power of money.
06. Entities that prepare financial statements on the basis of historical cost accounting do so without considering changes in general price level or a specific price increase of a recognized asset or liability. An exception to this principle is applied to the assets and liabilities as required, or elected, to be measured at fair value. For example, fixed assets are revalued at fair value. However, some entities present the financial statements based on current cost approach that reflects the impact of changes in specific prices of assets.
07. Hyperinflation in the economy, financial statements, either prepared on the historical cost approach and cost approach now, it will only work if it is expressed in units of measurement that applies at the end of the reporting period. Therefore, this statement is applied to entities that provide financial statements denominated in hyperinflation economy. Entities are not allowed to present separate financial statements are not restated, although attaching the information required by this Statement.
08. Entity's financial statements that functional currency is the currency hyperinflation economy, based on historical cost approach or a current cost approach, are presented in units of measurement that applies at the end of the reporting period. Corresponding figures for the previous period required by IAS 1 (revised 2009) Presentation of Financial Statements and any information in the previous period are also presented in the unit of measurement is now at the end of the reporting period. For the purpose of presenting comparative amounts in a different presentation currency, applied IAS 10 (revised 2010): Effects of Changes

Sources: Implementation Approach Makes Return in PSAKAK 63: Financial Reporting in Hyperinflation Economy


F. Knowing whether a constant dollar or current cost is better to measure the effects of inflation.

G. Definition of a double dip (double dip) and describes how handling.
 

FOREIGN CURRENCY TRANSLATION

A. Distinguish between the translation and conversion of foreign currency.

Accounting for foreign currency translation is undoubtedly one of the most controversial technical issues faced by multinational companies who feel the need to prepare consolidated financial statements concerning the operating results of both domestic and from abroad. Most of the problems associated with currency translation comes from the fact that the exchange rate, foreign exchange rates used in the translation process is rarely constant. Consequently, operating results may vary, often with very conspicuous, due to the difference in the rate at which translation is used and the disposition of accounting of the financial effects it produces. Although most of the technical issues in accounting tends to resolve itself over time, foreign currency translation terrnyata is an exception. That this trend will continue to be supported by such developments as the collapse of the dominance of the dollar, the currency rate movements are approved by the government, and the globalization of world capital markets, which have increased the importance of reporting and financial disclosure. -Perkembanganseperti developments have played a major role increasing interest in executive- financial executives, accountants, and financial community on the importance and economic consequences of foreign currency translation. Let us look at the nature and development of international accounting puzzle this puzzle.
Difference between the translation and conversion of foreign currency Translation is not equal to the conversion. Translation is just a change of monetary units, as well as a balance sheet presented are expressed in British pounds back into the U.S. dollar equivalent value. There is no physical exchange that occurred, and no related transactions that have occurred as it carried out the conversion. Balances in foreign currencies are translated into domestic currency equivalent value based on the foreign exchange rate is the price of one unit of a currency expressed in another currency. State's major trading currencies are bought and sold in global markets. With linked via a sophisticated telecommunications network, market participants include banks and other currency intermediaries, businesses, individuals and professional traders. By providing a place for the buyer and the seller's currency, the foreign exchange market to facilitate the international transfer payments (eg, from importers to exporters), allow for international sale or purchase on credit (eg, a bank letter of credit that allows the goods delivered to the buyer unknown prior to payment), and providing tools for individuals or businesses to protect themselves from the risk of the currency is unstable. Foreign currency transactions occur on the spot market, forward, or swap. Currency bought or sold on the spot generally must be sent as soon as possible, ie within 2 working days. Spot market exchange rate is influenced by many factors, including differences in inflation rates between countries, differences in national interest and expectations of the future exchange rate. Transaction on forward markets is an agreement to exchange one currency for a certain amount into another currency at a future date. Quotations on forward markets is expressed by the discount or premium of the spot rate. Swap transaction involves the purchase of spot and forward sales or spot sales or purchases forward, on a currency simultaneously. Investors often make use of swap transactions to take advantage of interest rates higher in a foreign country, the same opportunity to protect themselves against unfavorable movements of the exchange rate of foreign exchange.

Sources: http://whindajuli.blogspot.com/2011/05/translasi-mata-uang-asing.html


B. Understanding the terms in the translation of foreign currency.

Translation is the translation of foreign currency. Translation is a foreign exchange (governed by the IAD 21)
1. Translation occurs when a company has significant subsidiaries, and No MNC (Multy National Corporete)
2. Translational change in different units into units of money.
3. translation of the play crucible

Translation is a translation process programming language (source code) to make a file or other form of display. Transalai process includes the terms: Compile, Interpret, and Link. Computer application programs (software) which is developed can be in three forms:
1. Source-code
2. Intermediate-code
3. The executable code

There is a two stage process of translation:
1. Translation of the source-code to the intermediate-code
2. Translation of the intermediate-code into executable code

Variations Translation Approach
Translational approach in the form of computer program source-code into executable code:
1. Full-interpretation. Translation of the source-code directly into the
executable code by using the stage sat alone.
2. Mixed. Translation of the source-code to the intermediate-code is
compile (resulting output file). Translation of the intermediate-code to
is interpret-code executable (not generated output file).
3. Full-compilation. Translation of the source-code to the intermediate-code is compiled (no file output). Translation of the intermediate-code into executable code to be compiled as well (no file output). Word 'compile' is used as a term that generates the output file translation. Henceforth, the word compile meaningful 'translation of the source-code to the intermediate-code (which generates an output file)'. In practice, the use of this word so carelessly, it could mean anything.

SOURCE: http://whindajuli.blogspot.com/2011/05/translasi-mata-uang-asing.html

C. Knowing the differences advantages and disadvantages of foreign currency translation.

If the point of view of local currency to be used (local companies viewpoint), the entry of the translation adjustment in current earnings do not need to be done. Enter translation gains and losses in earnings will distort the real financial relationships and can mislead the users of such information. Translation gains or losses should be treated from the standpoint of local currency as an adjustment to equity owners.If the parent company's reporting currency is the unit of measurement of the financial statements are translated (the parent company's point of view), it is advisable to recognize gain or loss on translation of profit as soon as possible. Point of view of the parent company saw overseas subsidiaries as an extension of its parent company. Translation gains and losses reflect the increase or decrease in equity of foreign investment in domestic currency and should be recognized.

Advantages and disadvantages of foreign currency translation1. PenagguhanChanges in the value of domestic currency equivalent of the net assets of foreign subsidiaries are not realized and no effect on the local currency cash flows generated from foreign entities. Translation adjustment should be accumulated separately as part of consolidated equity.2. Pengangguhan and AmortizationSuspension of translation gains or losses and to amortize it over the useful adjustment items related to the balance sheet, primarily related to debt ditangguha = kandan will be amortized over the related fixed assets, which is charged against earnings in the same way with the burden of depreciation or deferred and amortized during the remainder of the loan as an adjustment to interest expense.3. Partial SuspensionTranslation gains and losses is to recognize the losses as soon as possible after it happens, but admitted only after the profits realized, this is simply because it is an advantage, it ignores the changes in exchange rates.4. Not suspendedRecognize translation gains and losses in the income statement as soon as possible. However, inserting translation gains and losses in the current year's profit will introduce a random element in the profits that may result in significant fluctuations in earnings in case of exchange rate changes.Translation gains and losses reflect the increase or decrease in equity investments in domestic currency and should be recognized.

Sources: http://andamifardela.wordpress.com/2011/05/11/translasi-mata-uang-asing/

D. Calculate gains and losses of foreign currency translation.

E. Understanding the effect of using various methods of foreign currency translation of financial statements.

Although most of the technical issues in accounting tends to resolve itself over time, foreign currency translation terrnyata is an exception. That this trend will continue to be supported by such developments as the collapse of the dominance of the dollar, the currency rate movements are approved by the government, and the globalization of world capital markets, which have increased the importance of reporting and financial disclosure. Such developments have profoundly increased interest ¬ executive-financial executives, accountants, and financial community on the importance and economic consequences of foreign currency translation. Let us look at the nature and development of international accounting puzzle this puzzle.

Single Rate MethodBased on this translational approach, the financial statements of foreign operations, which are considered by the parent company as an autonomous entity, has the reporting of their own domicile. This is a local accounting environment where foreign affiliates are mentraksaksikan his business affairs. To maintain the "flavor" of the local currency reports, a way must be found so that translation can be implemented with minimal distortion. The best way is the use of the method of exchange rate policies.Since all financial reports of foreign exchange is actually multiplied by a konstansta, this translation method to maintain its financial results and the original relation (eg financial ratios) in the consolidated statements of individual entities that are consolidated. Only the form of overseas estimates, not the essence, the change in the method of exchange rate policies.Although interesting and conceptually simple, the method of exchange rate policies were blamed by some people because it undermines the basic purpose of the consolidated financial statements, that is because it presents, for the benefit of shareholders of the parent company, operating results and financial position of the parent company and firms from the perspective of children the single currency. maintain the parent company's reporting currency as the unit of measurement. In the prevailing exchange rate method, the results will reflect the consolidation of perspekfif-exchange perspective of each country where companies are children. For example, if an asset dip = roleh an overseas subsidiary company for when the rate was 1.000 VA VA 1 = $ 1, then from the perspective of historical cost dollars is $ 1,000; from the perspective of local currency is also $ 1000. If the exchange rate changed to VA 5 = $ 1, the historical cost of those assets from the perspective of the dollar (translas' historical cost) remains $ 1,000. If the local currency will be retained as the unit of measurement, will be expressed nifai assets of $ 200 (exchange rate translation effect).Rate method applies also to blame because it assumes that all assets are influenced by local-currency exchange rate risk (ie, assuming that the fluctuations in the domestic currency equivalent, which is caused by fluctuations translational running, an indicator of changes in the intrinsic value of those assets). Hat is rarely true because the value of inventory and fixed assets in foreign countries are generally supported by local inflation.

Multiple Rate MethodsMethods of combining multiple exchange rate exchange rate historically runs and in the process of translation. 3 Such methods are discussed below.Force-historical method. Based on the true-historical approach, which is popular in the U.S. and other places before the year 1976, current assets and current liabilities of a subsidiary abroad are translated into the reporting currency using the exchange rate of its parent company applies. Assets and liabilities are non-smooth translated with historical rates.Items of income statement, except for depreciation and amortization, are translated at the exchange rate on average each month of operation or on the basis of the weighted average of the entire period to be reported. Depreciation and amortization are translated using historical exchange rates prevailing at the time of the relevant asset is obtained.This methodology is, unfortunately, has some drawbacks. For example, this method is less choose a conceptual justification. Existing definitions of assets and liabilities and non-current classification does not explain why such a manner which will determine the exchange rate used in the process transiasi.Monetary-nonmonetary method. As with any true-historical method, the method moniter using pattern-classification of non-monetary balance sheet to determine the appropriate exchange rate translation.Due to monetary items in cash settled; usage rate applicable to translate the items of foreign exchange domestic currency equivalent yield that reflects the realizable value or value of the solution.Temporal method according to the temporal approach, translational currency conversion is a process of measurement (ie, repeated presentation of a particular value). Therefore, this method can not be used to change the attributes of an item that is being measured; this method can only change the unit of measurement. Balance of foreign currency translation, for example, just change the (restate) the denomination of inventory. not the actual assessment. In U.S. GAAP, assets are measured based on jumiah cash on hand at the balance sheet date. Receivables and payables expressed in a number expected to be received or paid at maturity. Liabilities and other assets are measured at the prevailing price when the item is acquired or item ¬ occurs (historical price). Even so, some of which are measured by the prices prevailing at the date of financial statements (the price goes), such as inventory under the rules of cost or market. In short, there is a dimension of time associated with the values ​​of this money.By Lorensen, the best way to maintain accounting bases are used to measure these items is to translate the foreign currency amount of foreign currency at the exchange rate prevailing on the date of the measurement of foreign currency takes place. Temporal principle thus stated that money, receivables, and payables are measured at the promised amount should be translated using the exchange rates prevailing at balance sheet date. Assets and liabilities are measured at the price of money should be translated using the exchange rates prevailing on the date with respect to the price of money.

Translation methods can be classified into two types of methods that use a single exchange rate for the present re-translation of foreign currency balances to the equivalent value in domestic currency or a method that uses a variety of rates.1. Methods Single CurrencyThis method has long been popular in Europe, applying the exchange rate, the current exchange rate and the closing exchange rate, for all assets and liabilities lancer. Revenues and expenses denominated in foreign currencies are generally translated using the exchange rate prevailing at the time the posts are recognized. However, to facilitate these items are generally translated using the weighted average exchange rates are appropriate for the period. The financial statements of a foreign operation has its own reporting domicile, local currency environment in which the foreign affiliate companies do business. An asset or liability denominated in foreign currency is said to face foreign exchange risk if the equivalent in the currency used to translate the asset or liability.2. Multiple methods of exchange rateThe method combines Multiple Currency exchange rate exchange rate historically and now in the process of translation.3. Now the method-NonkiniBased on the Method of Non-Now-Now, lancer current assets and liabilities of foreign subsidiaries are translated into the reporting currency of its parent company based on the exchange now. Assets and liabilities are translated lancer historical rates of exchange. Items of income statement (except for depreciation and amortization) are translated based on the average rate prevailing in each month of operation, or based on a weighted average over the entire reporting period. Depreciation and amortization are translated based on the historical exchange rate recorded saaat assets acquired.However, this method does not consider the economic element. Using year-end exchange rate to translate the lancer assets implies that cash, receivables, and inventory in foreign currencies are equally at risk of exchange rate.4. Monetary-nonmonetary methodNon-monetary method Monetary also use the balance sheet classification scheme fatherly determine the appropriate exchange rate translation. Monetary assets and liabilities are translated based on the exchange rate now. Items of non-monetary assets, long-term investment, and stock investors are translated using historical exchange rates. Items of income are translated using a procedure similar to that described for the concept of non-present now.5. Temporal method statements
By using the temporal method, tranlasi currency conversion is a process of re-measurement or presentation of a certain value. This method does not change the attributes of an item being measured, but only change the unit of measurement. Translation of these balances in foreign currency-denominated causes repeated measurements such items but not the actual assessment. Under U.S. GAAP, measured by the amount of cash on hand at the balance sheet date. Receivables and liabilities are stated at amounts expected to be received or paid at maturity.

SOURCE: http://andamifardela.wordpress.com/2011/05/11/translasi-mata-uang-asing/ 

F. Evaluating and selecting foreign currency translation method best suits the business and financial market conditions.

Under the temporal method, monetary items such as cash, receivables, and liabilities are translated based on the exchange now. Such items are translated at the exchange rate of monetary base that maintains in the first measurement. In particular, the value of assets in foreign currencies are reported at historical cost, are translated based on the historical exchange rate. Why is that? This is because historical cost in foreign currencies are translated at the exchange rate exchange rate historically produces historical cost in domestic currency.
These four methods discussed at one time been used in the United States and can be found even today in many countries. In general, these methods lead to the translation of foreign currency which is quite different. The first three methods (method of exchange rate now, the method now-non-date, and method-monetary non-monetary) are used in the identification of assets and liabilities which are at risk or may be protected from foreign exchange risk. Then, the translation method applied consistently by taking into account these differences.

WHICH IS BEST?
EXCHANGE RIGHT NOW
So far this term the exchange rate used in translation method refers to the historical or present exchange rate. The average rate is often used in the income statement for the posts load. Some countries use the exchange rate is different for different transactions. In this situation should be selected some existing exchange rate. Some suggested alternatives are:
1. rate of dividend payment
2. free market rate, and
3. penalty rates or preferences that can be used, such as those involved in import export activities.

SOURCE: http://andamifardela.wordpress.com/2011/05/11/translasi-mata-uang-asing/

G. Understanding the relationship between the translations of foreign currency with inflation.

The use of the exchange rate is now to translate the cost of non-monetary assets are located in berinflasi environment will ultimately lead to an equivalent value in domestic currency is much lower than the initial baseline measurement. At the same time, earnings will be much larger translated with respect to load depresisasi which is also lower. The translation as it can be more easily mislead readers as to give information to the reader. Assessment of the lower dollar typically lower earnings power akutal of foreign assets which are supported by local inflation and the ratio of return on investment that affected inflation in a foreign operation may create false expectations on future profits.
FASB rejected before the inflation adjustment process of translation, because the adjustment is not inconsistent with the historical cost basis of the assessment framework used in the basic financial statements in the U.S.. As a solution FAS No. 52 requires the use of the U.S. dollar as the functional currency for those residing overseas operations with hyperinflation environment. This procedure will maintain a constant value of the dollar equivalent of foreign currency assets, because these assets will be translated according to the historical rate. The imposition of losses on fixed assets in the translation of foreign currency to equity shareholders will cause a significant effect on financial ratios. Foreign currency translation problem can not be separated from the problem of accounting for foreign inflation.

SOURCE: http://andamifardela.wordpress.com/2011/05/11/translasi-mata-uang-asing/