Foreign Currency Translation and Changing Prices in Perfect and Complete Markets
在完美和完全市场假设下，探讨外币折算主要方法的性质，识别各方法具备其倡导者所声称属性的充分条件，并明确折算损益的作用。
Our purpose is to explore some properties of the major methods of foreign currency translation under the assumptions of perfect and complete markets. In doing so, we identify a set of sufficient conditions under which the various methods possess properties claimed by their advocates. Moreover, the role played by the controversial and elusive translation gain or loss becomes clearly defined. Neither the properties of the various methods nor the role of the translation gain or loss are obvious, notwithstanding the considerable debate during the recent attempt to resolve the issue in the policy domain.' In order to interpret the disclosures under the various methods of translation, it is necessary to make an assumption about the economic forces that induce changes in the exchange rates. The perspective we adopt is that changes in exchange rates are driven solely by differential rates of inflation among the respective countries. Given this assumption, we analyze the properties of three accounting models-translation methods: historical cost accounting with foreign-denominated subsidiary financial statements translated at historical rates of exchange, compre-