Wiley GAAP 2008

Definitions of Terms

Conversion.	The exchange of one currency for another.
Current exchange rate.	The rate at which one unit of a currency can be exchanged for (converted into) another currency. For purposes of translation of financial statements in accordance with FAS 52, the current exchange rate is the rate at the end of the period covered by the financial statements or at the dates of recognition in those statements with respect to revenues, expenses, gains, and losses.
Discount or premium on a forward contract.	The foreign currency amount of the contract multiplied by the difference between the contracted forward rate and the spot rate at the date of inception of the contract.
Foreign currency.	A currency other than the functional currency of the reporting entity being referred to (for example, the US dollar could be a foreign currency for a foreign entity). Composites of currencies, such as the Special Drawing Rights on the International Monetary Fund (SDR), used to set prices or denominate amounts of loans, etc., have the characteristics of foreign currency for purposes of applying FAS 52.
Foreign currency statements.	Financial statements that employ as the unit of measure a functional currency that is not the reporting currency of the enterprise.
Foreign currency transactions	Transactions whose terms are denominated in a currency other than the reporting entity's functional currency. Foreign currency transactions arise when an enterprise (1) buys or sells goods or services on credit ...