Under FASB ASC 830, Foreign Currency Matters, when the current rate method is used, how are translation adjustments treated in the consolidated financial statements?
A) As gains or losses on the current period consolidated income statement
B) As prior period adjustments to retained earnings of the parent
C) As part of other comprehensive income on the consolidated balance sheet
D) None of the above because the temporal method is not allowed under FASB ASC 830.

Question

Quizplus · Accepted Answer

When the current rate method is used, translation adjustments are treated as part of other comprehensive income on the consolidated balance sheet. This is because the current rate method aims to reflect changes in the value of foreign currency denominated assets and liabilities due to fluctuations in currency exchange rates. These changes are recognized as translation adjustments and reported as a component of other comprehensive income on the consolidated balance sheet until the foreign operation is sold or otherwise disposed of.

Under FASB ASC 830, Foreign Currency Matters, When the Current