Current Rate Method - Net Income
Under the current rate method for FX accounting, net income is recorded at the average FX rate (since topline and all associated expenses within the P/L are at the average rate). However, in order to make the balance sheet balance, since assets and liabilities are at the current rate the shareholders equity section must also be at the current rate.
How would this work, net income (which is at the average FX rate) feeds into shareholders equity on the balance sheets (which would be at the current FX rate).
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