[Anonymous]

Question is from Becker: CPA-01271

Fogg Co., a U.S. company, contracted to purchase foreign goods. Payment in foreign currency was due one month after the goods were received at Fogg’s warehouse. Between the receipt of goods and the time of payment, the exchange rates changed in Fogg’s favor. The resulting gain should be included in Fogg’s financial statements as a(an):

a. Component of income from continuing operations.

b. Extraordinary item.

c. Deferred credit.

d. Separate component of other comprehensive income.

Explanation

Choice “a” is correct, component of income from continuing operations.

Why is it not d? OCI includes foreign currency adjustments right? Please explain….where I am making the mistake. Thanks.

[UHC2005]

Typically foreign currency translation fluctuations that cause a gain or loss have to be recognized on the Income Statement as income from continuing operations, not OCI.

Using Ninja MCQ, NINJA Notes, Audio, Flashcards and BLITZ, and 2014 Wiley Text

FAR - (61,63)
AUD - (68)

Keep Calm and RTMFQ

Accountant, what is best in life? To crush your MCQs, see them driven before you, and hear the lamentation of their SIMS!

[UHC2005]

Typically foreign currency translation fluctuations that cause a gain or loss have to be recognized on the Income Statement as income from continuing operations, not OCI.

Using Ninja MCQ, NINJA Notes, Audio, Flashcards and BLITZ, and 2014 Wiley Text

FAR - (61,63)
AUD - (68)

Keep Calm and RTMFQ

Accountant, what is best in life? To crush your MCQs, see them driven before you, and hear the lamentation of their SIMS!

[Study Monk]

Foreign Currency Translations are the only foreign currency items that hit other comprehensive income. Translation is when you redoing the financials from the functional currency to a different reporting currency. Do not confuse translation for transactions. All foreign currency transactions hit income statement.

I spoke to an ancient wise man who sent me on a mushroom induced journey through an ancient forest to find the key to passing the CPA exam. A talking spider monkey told me to throw the last of my drinking water in the dirt to find what I was looking for. So I followed his instructions and the following message appeared in the soil:

"Do 5000 multiple choice questions for each section"

[Study Monk]

Foreign Currency Translations are the only foreign currency items that hit other comprehensive income. Translation is when you redoing the financials from the functional currency to a different reporting currency. Do not confuse translation for transactions. All foreign currency transactions hit income statement.

I spoke to an ancient wise man who sent me on a mushroom induced journey through an ancient forest to find the key to passing the CPA exam. A talking spider monkey told me to throw the last of my drinking water in the dirt to find what I was looking for. So I followed his instructions and the following message appeared in the soil:

"Do 5000 multiple choice questions for each section"

[zieba]

So to be clear – I like reading these as it really helps to make certain topics memorable – UHC's answer was incorrect, and it should have read:

Typically foreign currency TRANSACTION fluctuations that cause a gain or loss have to be recognized on the Income Statement as income from continuing operations, not OCI.

Yes?

AUD - 75*, 88 done 5/14! (*exp)
BEC - 74 , 77
REG - 65 , 76 (10 point combooo!!)
FAR - 69 , 75

Dr: perseverance
Dr: intelligence
Dr: luck
. Cr: . advisory score

[zieba]

So to be clear – I like reading these as it really helps to make certain topics memorable – UHC's answer was incorrect, and it should have read:

Typically foreign currency TRANSACTION fluctuations that cause a gain or loss have to be recognized on the Income Statement as income from continuing operations, not OCI.

Yes?

AUD - 75*, 88 done 5/14! (*exp)
BEC - 74 , 77
REG - 65 , 76 (10 point combooo!!)
FAR - 69 , 75

Dr: perseverance
Dr: intelligence
Dr: luck
. Cr: . advisory score

[n.ACMA]

foreign currency translation is when ur coverting F/S reported in some foreign currency to ur own currency. normally its done in the case of foreign subsidiaries who make their F/S in their reporting currency and when making consolidated accounts, u convert their F/S in ur currency. this question pertain to foreign currency transaction in the normal course of business, it will be reported in the I/S in the current period. If the transaction isn't closed at the year end, then the gain/ loss between foreign currency value and ur local currency will be recognised at the year end in ur F/S and the difference between the price at the year end and at the transaction closing date will again be reocognised at the I/S under income from continuing operations.

[n.ACMA]

foreign currency translation is when ur coverting F/S reported in some foreign currency to ur own currency. normally its done in the case of foreign subsidiaries who make their F/S in their reporting currency and when making consolidated accounts, u convert their F/S in ur currency. this question pertain to foreign currency transaction in the normal course of business, it will be reported in the I/S in the current period. If the transaction isn't closed at the year end, then the gain/ loss between foreign currency value and ur local currency will be recognised at the year end in ur F/S and the difference between the price at the year end and at the transaction closing date will again be reocognised at the I/S under income from continuing operations.

[UHC2005]

Sorry about that :/, I flip-flopped those when I took international accounting as well.

Oh well, back to reading more and posting less.

Using Ninja MCQ, NINJA Notes, Audio, Flashcards and BLITZ, and 2014 Wiley Text

FAR - (61,63)
AUD - (68)

Keep Calm and RTMFQ

Accountant, what is best in life? To crush your MCQs, see them driven before you, and hear the lamentation of their SIMS!

[UHC2005]

Sorry about that :/, I flip-flopped those when I took international accounting as well.

Oh well, back to reading more and posting less.

Using Ninja MCQ, NINJA Notes, Audio, Flashcards and BLITZ, and 2014 Wiley Text

FAR - (61,63)
AUD - (68)

Keep Calm and RTMFQ

Accountant, what is best in life? To crush your MCQs, see them driven before you, and hear the lamentation of their SIMS!

[Author]

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