Substantial controversy exists in practice over how translation gains and losses should be reflected in the financial statements.

Question

Quizplus · Accepted Answer

Translation gains and losses arise when financial statements of a foreign operation are translated into the reporting currency of the parent company. The controversy stems from different accounting standards and practices (such as IFRS vs. U.S. GAAP) prescribing different methods for recognizing these gains and losses, either in net income or in other comprehensive income, leading to debates over the most accurate reflection of a company's financial health.

Substantial Controversy Exists in Practice Over How Translation Gains and Losses