Methods handling translation gains and losses
How translation gains and losses are handled differently as per current rate method as compared to the other three methods, which is, monetary/nonmonetary method, current/noncurrent method, and the temporal method?
Expert
Under method of the current rate, translation gains and losses are handled as an adjustment to the net worth through an equity account termed as the ‘cumulative translation adjustment’ account. Nothing passes through income statement. Another three translation methods pass foreign exchange gains or losses through income statement before they enter on to balance sheet through the accumulated retained earnings account.
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