Ivanhoe Energy a Canadian company incurs net foreign exchange adjustments
Ivanhoe Energy, a Canadian company, incurs net foreign exchange adjustments in 2010.
The U.S. dollar is the functional currency. In 2010, the Canadian dollar continued to strengthen relative to the U.S. dollar. Ivanhoe Energy raised $150 million in Canadian dollars in a private placement in the first quarter of 2010. In addition, Ivanhoe has $40 million in debt maintained in Canadian dollars. While the company uses Canadian GAAP, it provides an income statement using U.S. GAAP. The following partial income statement using U.S. GAAP is available:

A. Which method does Ivanhoe use to translate the financial statements? Explain your answer.
B. Explain how the change in the exchange rate is consistent with numbers reported on the incomestatement.
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