Impact of Foreign Currency Translation on Financial Statements

In the context of multinational operations, companies often face various challenges related to financial reporting due to the use of different currencies. One aspect of this is how foreign currency translations impact financial statements. For a multinational corporation, the financial statements of foreign subsidiaries must be converted to the reporting currency of the parent company. This translation process can significantly affect the reported income and equity.

Considering this information, which of the following statements best describes the impact of foreign currency translation on a company's financial statements?