Regarding accounting issues related to foreign currency exchange rates:

1. Under what circumstance(s) would the amount included in the foreign currency translation account be recorded in the Income Statement instead of the Statement of Other Comprehensive Income?

2. Specificallly, what circumstance(s) would it potentially make sense for a Company to consider hedging the amount included in the Statement of Other Comprehensive Income for Foreign Currency Translation?

3. Explain in a few sentences how the accounting for foreign currency translation differs for subsidiaries of a US Parent Company operating in a hyperinflationary environment which are consolidated into the Parent Company’s financial statements.

4. What does a debit or credit of the amount of the translation adjustment in the current year mean with regards to the movement of foreign exchange during the period against the US Dollar?

Answer rating: 100% (QA)

companys statement of profit and loss also referred to as its earnings report has its drawbacks For the foremost part the statement accurately reflects a companys past profitability and earnings growt... View the full answer