dc.description.abstract | When countries all over the world is planning to be in accordance with International Financial Reporting Standards(IFRS).Enterprises in Taiwan will adopt IFRS to make financial statements in 2013.How to confront the revolution of accounting principles?What’s the primary impact?IAS 21︰「The Effects of Changes in Foreign Exchange Rates」is top priority of accounting issues selected by the biggest four CPA ‘s firm, The mass media report the influence of option of functional currency to Taiwan’s company frequently. The research attempt to take A company for example to find how to choose functional currency under the norm of IAS21,whether the exchange risk of A company increase with different functional currency ,and what’s the solution?
The thesis analyze A company’s business model, then discuss all factors of effect while A company select different functional currency, continuing to focus on the exchange risk about selecting different functional currency and strategy to deal with the situation. Use element of external environment to infer essential factor influencing decision, choose three axis from essential factor belonging to high impact and uncertainty and develop different conditions. Finally, simulate these conditions and analyze the result to find feasible ways.
The research find when A company decide functional currency of each company of the group, it consider each company’s product positioning, ability to negotiate, major competitor, and market, etc. By simulate diverse situation, we find if adopting US as functional currency, the exchange gain and loss is smaller than adopting local currency. Whether the functional currency is USD or local currency, when USD devaluate, there is exchange risk and need to hedge. But if we select USD as functional currency, the hedging region is smaller than local currency.
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