Under the temporal method,what is the accounting treatment for exchange gains and losses arising from previous years?
A)Reported as equity
B)Reported in other comprehensive income
C)Reported in consolidated net income
D)Included in opening consolidated retained earnings

Question

Quizplus · Accepted Answer

Exchange gains and losses arising from previous years are included in the opening consolidated retained earnings under the temporal method of accounting. This is because the temporal method requires the translation of foreign currency monetary assets and liabilities at the current exchange rate and non-monetary assets and liabilities at historical exchange rates. Any exchange gains or losses arising from this translation are recognized in the consolidated income statement. However, as these gains or losses relate to previous periods, they are included in the opening consolidated retained earnings in the period of adoption of the temporal method.

Under the Temporal Method,what Is the Accounting Treatment for Exchange