January 2018 Lease Accounting Exposure
"That is a pure accounting exposure companies have on operations or business outside of their home country," he said.
"Companies don't want to spend real dollars to hedge what are basically accounting exposures."
(3) Accounting exposure
, transaction exposure or strategic/long-term exposure are alternative categories that focus more on the source of exposure.
Using responses to the ten accounting exposure
drafts receiving the highest public responses, the active role of Big Eight (now Big Five) firms is underscored.
Translation is governed by accounting conventions and therefore also is referred to as accounting exposure
. Translation exposure stems from differences in foreign exchange rates between consolidation dates and the effects of these changes on the valuation of a company's assets and liabilities abroad.
Strategic foreign currency management differs from traditional accounting exposures
because strategic foreign currency management becomes an integral part of a business's operations and requires the combined efforts of operating and financial functions to identify currency risks and opportunities.
For the hedging of accounting exposures
, foreign currency debt and currency forwards represent the most popular risk management instruments.
A focus on living benefits that fall under mark-to-market accounting ignores other living benefits, which generate identical economic exposures but different accounting exposures
, such as income benefits or withdrawal benefits for life.