accounting-“Foreign Currency Transactions and International Financial Reporting Standards (IFRS)”

QUESTION

“Foreign Currency Transactions and International Financial
Reporting Standards (IFRS)”
•
Analyze the main reasons why a company might prefer a foreign
currency option over a forward contract in hedging a foreign currency firm
commitment. In contrast, analyze the main reasons why a company might prefer a
forward contract over an option in hedging a foreign currency asset or
liability. Determine the option (i.e., a foreign currency option or a forward
contract) that you consider to be more effective. Provide a rationale for your
response.
Assume that all the companies in the world use International
Financial Reporting Standards (IFRS). Determine at least two (2) obstacles to the
worldwide comparability of financial statements, and provide one (1) strategy
to overcome the obstacles in question. Provide support for your rationale.

ANSWER:

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