Under SFAS No. 52, if the results of foreign-currency-denominated operations will not affect U.S. dollar cash flows, no exchange gain or loss is recorded.

Question

Quizplus · Accepted Answer

This is correct. SFAS No. 52 provides guidance on how to account for foreign currency transactions and translations. It states that if a foreign currency transaction or translation does not affect U.S. dollar cash flows, then no exchange gain or loss should be recorded. However, if the transaction or translation does affect U.S. dollar cash flows (e.g. through the settlement of a foreign currency receivable or payable), then exchange gain or loss should be recognized.