Exchange is the relation of values between currencies for acquisition of assets. It is the exchange of goods.
Exchange variation is the parity between the values in two currencies.
The dollar rate fluctuates in order to balance the volume of imports and exports. If the dollar is quoted very low in relation to the value of goods, we have excess imports because the imported product becomes cheaper here. On the other hand, the exporter will not be able to sell his products, since he will receive very little for each dollar sold, and would prefer to sell them domestically. The exchange policy is, therefore, a very important factor in the economic development of a country.
We can also state that restatement of financial statements consists of a series of procedures adopted by the time of calculation of the Year Income, considering effects of inflation on Equity and Results of these companies.
The main purposes of financial statement conversion are:
FAS52 is the pronouncement of FASB that deals with conversion of foreign currency - conversion of financial statements.
FAS 52 should be applied for converting financial statements, prepared according to the American accounting principles (US-GAAP), which will be included in the financial statements of American companies by means of:
When the purpose of financial statement conversion is to obtain resources from abroad or for making presentation to investors, the conversion procedures of FAS 52 need not necessarily be applied, unless specifically demanded by the creditor or investor.
Logically, this obligation does not apply for management purposes either. Even not being mandatory, companies from different countries adopt FAS 52, as it is a globally accepted methodology.