According to the current rate method of translation,
A) Transaction gains and losses are taken to income, but translation gains and losses are taken to the owners' equity section of the balance sheet.
B) Transaction and translation gains and losses are taken to the income statement.
C) Transaction and translation gains and losses are taken to the owners' equity section of the balance sheet.
D) Transaction gains and losses are taken to the owners' equity section of the balance sheet, but translation gains and losses are taken to the income statement.

Question

Quizplus · Accepted Answer

Under the current rate method, transaction gains and losses (from foreign currency transactions) are recognized in the income statement, while translation gains and losses (from translating financial statements of foreign operations) are recognized in other comprehensive income and accumulated in the equity section of the balance sheet, not affecting net income directly.

According to the Current Rate Method of Translation