Under FASB ASC 830, Foreign Currency Matters, When the Temporal

question 39

Multiple Choice

Under FASB ASC 830, Foreign Currency Matters, when the temporal method is used, how are translation adjustments treated in the consolidated financial statements?

• A) As gains or losses on the current period consolidated income statement
• B) As prior period adjustments to retained earnings of the parent
• C) As part of other comprehensive income on the consolidated balance sheet
• D) None of the above because the temporal method is not allowed under FASB ASC 830.

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Definitions:

Cash Flows

The total amount of money being transferred into and out of a business, especially affecting liquidity.

Transaction Exposure

The risk of adverse changes in exchange rates affecting the value of a company's transactions in foreign currencies.

Financial Risk

Refers to the possibility of losing money on an investment or business venture.

Home Currency

Home currency refers to the currency of the country in which an individual or entity primarily operates or resides.