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Accounting Rules for Foreign Currency Raise Questions

Tammy Whitehouse | July 19, 2011

Accounting rules on foreign currency continue to trip up plenty of companies, as global mergers and acquisitions gain steam amid volatile currency exchange rates.

Ken Miller, a partner with PwC, said during a recent Webcast that the firm gets many questions these days on how to apply foreign currency accounting rules, as companies navigate emerging global business issues and evaluate their foreign currency risk. M&A activity is resurging following the global financial crisis, yet currency exchange rates are volatile, especially between the U.S. dollar and the Euro, the Japanese yen, and the Australian dollar. Those two trends raise accounting questions about whether and how to tweak determinations about what functional currency a particular business unit is using, and how to adjust financial statements for currency translations properly, he said.

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