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Accounting for Exchange Rate Fluctuations.

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The article proposes a new method for measuring foreign exchange exposure, suggesting improvements for financial reporting.

The aim is to propose a comprehensive accounting method for measuring foreign exchange exposure of domestic parents with foreign subsidiaries.
Introduces a new accounting measurement model for exchange rate fluctuations.
Examines the impact of domestic and foreign price levels on accounting exposure.
Evaluates the method's applicability under various international monetary environments.
The proposed method effectively accounts for fluctuations in price levels and exchange rates.
It enhances hedging decisions by providing a clearer measure of exposure.
The approach supports better intercompany comparisons by measuring the economic effects of rate movements.

Keith R. Shwayder (1972) studied this question.

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