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Basic Question 5 of 7
How are foreign currency translation adjustments resulting from translating foreign currency financial statements to U.S. dollars currently reported?
B. Displayed as an extraordinary item in the income statement for the period in which the exchange rate changes.
C. Displayed in the stockholders' equity section of the balance sheet.
D. Displayed as an ordinary item in the income statement for losses, but deferred in the balance sheet for gains.
E. Displayed in none of the foregoing ways.
A. Displayed as an ordinary item in the income statement for the accounting period in which the exchange rate changes.
B. Displayed as an extraordinary item in the income statement for the period in which the exchange rate changes.
C. Displayed in the stockholders' equity section of the balance sheet.
D. Displayed as an ordinary item in the income statement for losses, but deferred in the balance sheet for gains.
E. Displayed in none of the foregoing ways.
User Contributed Comments 3
| User | Comment |
|---|---|
| tkorchmaros | 'translation' means 'all-current-method' and therefore translation gains/losses are flow into the cumulative translation adjustment account in stockholder's equity. |
| niti | i think so.. |
| bananabun2 | yes, the process of "remeasurement" is when we use the temporal method |
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Learning Outcome Statements
compare the current rate method and the temporal method, evaluate how each affects the parent company's balance sheet and income statement, and determine which method is appropriate in various scenarios;
calculate the translation effects and evaluate the translation of a subsidiary's balance sheet and income statement into the parent company's presentation currency;
CFA® 2025 Level II Curriculum, Volume 2, Module 12.