Gains or losses caused by translation adjustments when using the current rate method are reported separately on the:
A) consolidated statement of cash flow.
B) consolidated income statement.
C) consolidated balance sheet.
D) none of the above

Question

Quizplus · Accepted Answer

Gains or losses caused by translation adjustments when using the current rate method are reported separately on the consolidated balance sheet. This adjustment is made to the equity section of the balance sheet, and it represents the difference between the current rate and the historical rate of the foreign subsidiaries. The consolidated balance sheet reflects the assets, liabilities, and equity of all the subsidiaries as if they were one company, and therefore, it is the appropriate place to report these gains or losses. The consolidated income statement only reflects the revenues, expenses, and net income of the parent company and its subsidiaries, and the consolidated statement of cash flow shows the cash inflows and outflows of the company, but it does not reflect translation adjustments.

Gains or Losses Caused by Translation Adjustments When Using the Current