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Foreign Currency
Only a handful of middle market products handle foreign currency completely in compliance with FASB 52. If you need foreign currency features, a summary of these features for selected accounting software products is listed below:
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The international marketplace has never been stronger,
and the Internet is making that huge market more accessible to even the
smallest enterprises. Companies with Web sites suddenly find prospects
from halfway around the world can order their products as easily as a
customer down the street. Businesses that have never dealt with any
currency other than the U.S. dollar are finding they must contend with
pounds and rubles and yen and euros, and for the first time they must
consider the need for accounting software that supports foreign currency
transactions and reporting. Such support is more difficult than it first
appears. The accounting software packages with the strongest international features are currently produced by ACCPAC International, Axapta, Navision Attain, SAP, Epicor eFinancials, Great Plains and Solomon. Unfortunately, many other packages don't provide multiple currency support at all, don't support it fully or don't support it in all relevant modules. From a balance sheet reporting perspective, accounting for fluctuations in exchange rates became much easier in 1981 when FASB Statement no. 52 called for using the current exchange rate to compute both the value of the assets (and liabilities) and the related accumulated depreciation. However, other foreign currency computations can be more involved. For example, the value of inventory held in foreign warehouses must be restated each reporting period when fluctuating exchange rates result in the recognition of an unrealized gain or loss. Further, international sales transactions that take place often aren't processed until several minutes (or several hours) later, resulting in a gain or loss due to fluctuating exchange rates. Those adjustments also must be considered when restating data in foreign currencies. To handle these complexities, Platinum's multiple-currency module provides a screen to input the daily exchange rate for each relevant foreign currency. In that way, users can toggle between converting U.S. dollars to the foreign currency and converting the foreign currency back to dollars. Platinum for Windows by Best can even deal with budgeted exchange rates, producing reports that show the effects of favorable and unfavorable exchange rate fluctuations. Some smaller international companies attempt to avoid the complexities of foreign currency translation by offering goods for sale only in their base currencies and by accepting only credit card payments from international customers. With this strategy, they account for all receivables in U.S. dollars and the credit card company converts all revenue to U.S. dollars before receipt. While it may minimize the materiality of fluctuating currencies, this strategy doesn't avoid the problem completely because transactions are seldom transacted and consummated simultaneously. Beginning in 2002, the new euro coins and notes entered circulation, and all EU businesses must use the euro as their local currency. Currently, 12 countries are participating in the conversion to the euro : Belgium, Germany, Greece, Spain, France, Ireland, Italy, Luxembourg, The Netherlands, Austria, Portugal, Finland. Therefore, if you plan to do business in Europe, your accounting software should be euro-compliant. |
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