Under the current-rate method, what is the accounting treatment for exchange gains and losses arising from the current year?
A)Reported as equity
B)Reported in other comprehensive income
C)Reported in consolidated net income
D)Included in opening consolidated retained earnings

Question

Quizplus · Accepted Answer

Under the current-rate method, exchange gains and losses arising from the current year are reported in other comprehensive income. This is because the current-rate method uses the current exchange rate to translate foreign currency transactions and balances, which can result in gains or losses due to fluctuations in exchange rates. These gains or losses are not realized until the foreign currency is actually exchanged, so they are reported in other comprehensive income until that occurs.

Under the Current-Rate Method, What Is the Accounting Treatment for Exchange