When the temporal method is used, any exchange rate change adjustment to a parent's long-term intercompany receivable from (or payable to) its foreign subsidiary is reported as an adjustment to Other Comprehensive Income account (bypassing earnings)-if the amount is not expected to be paid in the foreseeable future.

Question

Quizplus · Accepted Answer

Under the temporal method, exchange rate changes affecting long-term intercompany receivables or payables are recognized in the income statement, not in Other Comprehensive Income, regardless of the expected timing of settlement.

When the Temporal Method Is Used, Any Exchange Rate Change