This paper utilizes the concept of aggregative consistency defined in Rubinstein and Fishburn , and the FASB's concept of representational faithfulness to evaluate foreign currency translation and accounting for changing prices as embodied in SFAS 70. The paper shows that SFAS 70 produces measurement errors and creates a foreign currency translation adjustment which does not reflect the effects of exchange rate changes. The conditions defined in the paper also facilitate an evaluation of the relative merits of restate/translate and translate/restate. Restate/translate can conceivably be used if there is no consolidation. In the more usual case where consolidation is required, translate/restate using the relevant shareholders' consumption index will yield aggregatively consistent values under fewer restrictive conditions.
Adler, Michael, and Trevor Harris. "Inflation, Translation and Conflicts in Statements of Financial Accounting Standards." Journal of International Financial Management and Accounting 1, no. 2 (June 1989): 152-70.
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