Both IAS 21 and FASB 52 require foreign currency transactions gains and losses to be reported (both realized & unrealized) - however neither standard indicates exactly where in the I/S it must be recorded. Anyone know?
the book says it will only affect EBIT margins
pretty sure unrealized to to OCI and realized hit the income statement…
i remember reading that somewhere. one is recorded in equity, the other is on the income statement cant remember which one is which anymore. I think US GAAP on income statement. I am forgetting the stuffs i read so fast.
ALL Current --> translation results in Cumulative translation adjustment—> OCI= unrealized Temportal–> directly to income statement (realized)
It seems that only unrealized (using the Current Rate Method) is reported under OCI however both realized/unrealized (using Temporal) CAN be reported in I/S as ‘Other Operating Income/Expenses’. If the translation is deemed to be normal part of operations then this is treated as part of EBIT. Have a look on CFAI FRA page 270 - 273. Yahoo reports both realized/unrealized F/X transactions on the I/S (pg. 272). Also the following excerpt on the top of pg. 271 hints that both realized/unrealized can be reported on the I/S: “Losses (gains) from F/X transactions include losses (gains) from F/X positions … at the closing rate on the B/S date.”