Foreign Currency Translation Gain – Income from Cont. Operations OR OCI???

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  • #171692
    jdj017400
    Member

    I’m working the following Becker MCQ:

    Jordan Co. had the following gains during the current period:

    Gain on disposal of business segment $500,000

    Foreign currency translation gain 100,000

    Under US GAAP, what amount of extraordinary gain should be presented on Jordan’s income statement for the current period?

    The correct answer is “a. $0”, which I got correct, however, the explanation states that “The $100,000 foreign currency translation gain will be reported as a component of income from continuing operations”.

    I thought Foreign Currency Translation Gains were part of OCI (per Becker’s PUFE R). But I see Jeff’s Ninja notes showing them as part of Continuing Operations???

    Am I missing something obvious, can someone please clarify?

    Thanks!

    BEC - 80 (11/30/2010), Lost Credit - Retake 11/30/2012, 80 (FINISHED!)
    AUD - 71 (05/31/2011), 79 (08/28/2011)
    REG - 70 (11/30/2011), 87 (02/09/2012)
    FAR - 61 (5/31/2012), 80 (08/31/2012)

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  • #346525
    Lizzerz79
    Participant

    I noticed the same thing. I'm using Becker too. The only thing I could think of is that they meant to say foreign currency transaction gain/loss would go in income from continuing ops. Foreign currency translation is supposed to go in OCI.

    AUD 4/1/12 98
    FAR 5/30/12 96
    BEC 7/1/12 92
    REG 8/18/12 94

    #346526
    Mayo
    Participant

    From what I know:

    Remeasurement —-> translation gain/loss = remeasurement gain/loss


    > income from cont ops

    Current rate method


    > translation gain/loss = cumulative translation adjustment


    > other comprehensive income

    So in either way, it never goes to the income stmt under extraordinary items.

    Mayo, BBA, Macc

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