O'Hare Entity, located in Northern Ireland, uses the British pound as its functional and presentation currency. O'Hare has investments in Midway Entity which uses the Yen as its functional and presentation currency. These investments are categorized as available for sale. Exchange gains or losses related to these investments are recognized in OCI.

Question

Quizplus · Accepted Answer

Exchange gains or losses on available-for-sale financial assets are recognized in Other Comprehensive Income (OCI) until the investment is sold or impaired, at which point the cumulative gain or loss previously recognized in OCI is reclassified from equity to profit or loss. This treatment is consistent with the accounting standards for foreign currency translation related to investments classified as available for sale.

O'Hare Entity, Located in Northern Ireland, Uses the British Pound