Conversion of Values to One Money Unit in the Consolidation Process

• Autorzy: Mieczysław Dobija , Marcin Jędrzejczyk
• Języki publikacji: EN

Abstrakty

EN

This paper shows the theoretical weaknesses underlying the standard of translation presented in the International Accounting Standards and the Financial Accounting Standards. An example of two companies from the USA and Poland, belonging to the same international capital group, shows that using the exchange rate to compute asset value in consolidated statements results in a distorted valuation. The Law of One Price, which states that the price of the same goods in different markets must be the same, constitutes a fundamental principle of the present procedures. But the empirical data gained through our research shows that the Law of One Price works very poorly in the case of the companies we considered. The reason that the Law of One Price fails is due to differences in wage productivity between the two countries tested. However, this means that if productivity is similar enough, the results would be acceptable and convergent with the Law of One Price. (fragment of text)

Słowa kluczowe

EN

Accounting standards; Accounting theory; Exchange rates

PL

Standardy rachunkowości; Teoria rachunkowości; Kurs walutowy

• Czasopismo: Emergo. Journal of Transforming Economies and Societies
• Rocznik: 2004
• Tom: 11
• Numer: nr 4
• Strony: 43--52

Twórcy

autor

Mieczysław Dobija

• Cracow University of Economics, Poland

autor

Marcin Jędrzejczyk

• Cracow University of Economics, Poland

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