What is FASB No. 8?

Welcome to the Investors Trading Academy talking
glossary of financial terms and events. Our word of the day is “FASB No. 8” (pronounced
FASBEE) An official opinion by the Financial Accounting
Standards Board on how to report a transaction. FASB statements set standards for the accounting
industry and help establish uniform practice insofar as it is possible.
U.S. accounting standard that requires US firms to translate their foreign affiliates’
accounts by the temporal method; that is, reporting gains and losses from currency fluctuations
in current income. It was in effect between 1975 and 1981 and became the most controversial
accounting standard in the US. It was replaced by FASB No. 52 in 1981.
This Statement requires that all amounts measured in a foreign currency be translated at the
exchange rate in effect at the date at which the foreign currency transaction was measured.
All exchange gains and losses were required to be included in income in the period in
which they arose, i.e., when the rates changed.

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