A translation adjustment may be necessary when:
A)notes to financial statements are converted from one language to another.
B)foreign currency financial statements are converted to another currency.
C)consolidated financial statements are prepared.
D)hedging foreign currency.

Question

Quizplus · Accepted Answer

A translation adjustment is necessary when foreign currency financial statements are converted to another currency. This is because exchange rates fluctuate, leading to a change in the value of assets and liabilities expressed in another currency. Therefore, a translation adjustment is done to adjust for these changes and accurately reflect the financial position of the company in the reporting currency.

A Translation Adjustment May Be Necessary When