Purchases of raw material from european company

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The CFO of a domestic US company needs to begin purchases of raw material from a European company. The foreign supplier has indicated that they are interested only in transacting business in their local currency. As the audit partner on the US company audit, he has contacted you for advice. The facts are as follows: a. Purchases began 2 months ago and will continue on a monthly basis for the next year b. Payments are made 30 days from date of purchase in the supplier’s local currency c. The Board of the US Company refuses to speculate in currency hedges, so the instruments need to be perfect hedges. d. In the future, the US company may be selling to a customer in that country. But no immediate plans exist now. You want to give the best advice possible. What would you tell your client they need to do so that they are in compliance with GAAP?

Reference no: EM132157096

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