When using the current rate method to record foreign subsidiary results, gains and losses arising from the translation process are reported separately as a component of stockholders' equity and excluded from reported net income.

Question

Quizplus · Accepted Answer

This statement is true. Gains and losses from the translation of foreign subsidiary results under the current rate method are reported as a component of other comprehensive income (OCI) within stockholders' equity, and are excluded from reported net income. This is in line with the concept of reporting comprehensive income, which aims to provide a more complete picture of a company's financial performance by including items that are not recognized in net income.

When Using the Current Rate Method to Record Foreign Subsidiary