The Foreign Currency Translation

Reforms in various aspects in China are unceasingly deepening, while our country economy has welcomed the rapid development period. In such a context, our enterprises no longer satisfy to seek developments merely in domestic and occupy a small scale of market. They have intended to expand the field of vision to all corners of the world, to seek the development opportunities. According to the Commercial Affairs Department, State Statistical Bureau and National Foreign Exchange Bureau's announcement "The Statistics Bullet about 2006-Year China Direct Investments in Foreign Countries", indicated that in 2006 the net amount of our country direct investments in foreign countries has achieved 21.16 billion U.S. dollars, the annual rising rate at the past 5 years reached as high as 60% in the past. At the same time, investment pattern has also undergone a significant transformation-from the simple way "building up small branch, setting up 'the window' " to putting up a factory, acquisition and merger, stock exchange, establishing strategy cooperation alliance and so on. It symbolizes our country foreign investment has stepped into the new international current transnational investment time. To outlook the "11th Five-Year" development planning blueprint, the next five years, Chinese enterprises' going- out will enter a high speed development period. Expecting to 2010, foreign investments will reach 60 billion U.S. dollars, the annual average rising rate will achieve 22%.Along with the strengthening of the world economics integration tendency, the enterprises' transnational operation situation has already formed. Many multinational corporations have been the main driving force to the world's development, while their operators are faced with more and more risks and challenges. Therefore, how to make our enterprises "go out" while "stand steadily", how to make our enterprises have ability to deal with the risks from transnational operation, it is necessary that the state policy-makers should put on stresses on, when carry on the foreign policy. Well, the accounting standards as an important national policy formulation aspect, how to select an appropriate foreign currency statement translation method is important to multinational corporations' controlling operational risks, which makes the standards in foreign currency translation become an indispensable constituent of the new China Accounting Standards System. In "NO.19-Foreign currency translation", we adopt the foreign currency statement translation method basically in accordance with the International Standards."Convergence is only the first step; equivalent-effect is the target." Then, at the present stage of economic development in and abroad, our use of foreign currency statement translation method can be helpful to our enterprises' multinational operations and offer the support to our enterprises to stand steadily abroad. These issues are the accounting theory community and practicing community is very concerned about.In order to properly answer these questions above, this article adopts general induction to elaborate mainly from two aspects. Firstly, as first part is an introduction to the paper. It involves selected topical motivation, meaning, writing thought and related literature summary. Secondly, the second part is the prelude to 3rd and 4th part. The main content is that on defining and comparing several sets of similar concepts basis, analyzes and reviews four main foreign currency statement translation methods. Thirdly, part three and part four are the body of this paper. They thoroughly analyze the theoretical foundation respectively from two conditions-ordinary situation and special situation (runaway inflation). Then, they inspect the standards on foreign currency statement translation in American, English, the Europe continent and International Accounting Standards Board so that it can provide a better reference to our country criterion construction. Lastly, it is the fifth part. It is the conclusion to the paper. On the one hand, I evaluate the appropriation of the related standards on foreign currency statement translation with the actual situation presently in China. On the other hand, from the future developmental view, I forward my suggestion on our long-term foreign currency statement translation method.