Which of the following statements about the Current Rate method is false?
A)Translation involves restating the functional currency amounts into the reporting currency.
B)All assets and liabilities are translated at the current rate.
C)If the subsidiary maintains their books in their functional currency,the current rate method is used.
D)The effect of exchange rate changes are reported on the income statement as a foreign exchange gain or loss.

Question

Quizplus · Accepted Answer

The false statement is that the effect of exchange rate changes are reported on the income statement as a foreign exchange gain or loss. Under the Current Rate method, all exchange gains and losses are reported in Other Comprehensive Income (OCI) and are not recognized in the income statement.

Which of the Following Statements About the Current Rate Method