Companies with foreign subsidiaries report translation adjustments as a component of other comprehensive income. Search the FASB ASC database to find answers to the following questions. For each equation, cut and paste (citing the source) supporting evidence found in the database. Then write a brief summary of your findings.
Since the translation adjustments are not reported in the income statement:
1. Do they create temporary differences between pretax financial income and taxable income, as defined in SFAS No. 52? Explain why or why not.
2. If they do not create temporary differences between pretax financial income and taxable income, do they create temporary differences? If so, are they accounted for in the same way as temporary differences related to financial income? Explain.