Foreign Currency Purchase Options And Risk Aversion Accounting in Foreign Currency Purchases
Journal Title: Muhasebe ve Finansman Dergisi - Year 2015, Vol 17, Issue 65
Abstract
As a result of foreign currency operations businesses are subject to exchange rate risks due to changes in exchange rates. Businesses appeal derivatives to eliminate the foreign currency risks and for exposuring minimal impact from the foreign currency risks. One of these derivatives is the foreign currency option contracts. In the first part of the study, theoretical information about foreign currency option contracts will be presented. Following to this part, an accounting case –based on the framework within the draft plan by Turkish Accounting Standards Board - that involves foreign currency option contracts in purchasing operations. In the example case it can be observed that the firm can be less affected by exchange rate increases by purchasing foreign currency option contract.
Authors and Affiliations
Mehmet MEMİŞ, Kayahan TÜM
Keywords
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