An exchange gain from remeasurement of a foreign entitys fin

An exchange gain from remeasurement of a foreign entity\'s financial statements, using Temporal method, should be: a. included in net income in the period it occurs b. included as a separate item in the equity section of the balance sheet c. deferred and amortized over a period not to exceed 40 years d. deferred until a subsequent year when a loss occurs that can offset against it

Solution

Exchange gain from remeasurement of a foreign entity\'s financial statements, using Temporal method is included in net income in the period it occurs.
Here the answer is a).
Temporal method is method of translating local currency into functional currency. Where foreign entity\'s currency is different from functional currency temporal method is used for conversion of foreign entity\'s currency.
Temporal method first translated the balance sheet and then income statement. Here Current, Historical and weighted average exchange rates are used for the conversion and the translation gains or losses arise using the temporal method are reported in the income statement or can say included in net income.