How Do the Current Rate and Temporal Methods Handle Translation

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The Answer is A major difference between the two methods is the treatment of translation gains and losses. Recording them in a separate CTA account is not permitted under the temporal method. Instead, translation gains and losses are "flowed through" the income statement, hence they have a direct impact on reported earnings. There are no tax consequences from these translation gains or losses because they are unrealized, but they do change reported earnings and increase earnings variability over time. Table 7-1 in the text summarizes the rules for translating foreign financial statements using the two methods.

How Do the Current Rate and Temporal Methods Handle Translation

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How Do the Current Rate and Temporal Methods Handle Translation

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Correct Answer:
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