XYZ Corporation is a multinational company operating in various countries, with significant transactions in both local and foreign currencies. Last year, XYZ reported a net income of $5 million in its foreign subsidiary. Due to fluctuating foreign exchange rates, the translation of this income to the parent company's reporting currency resulted in a change in consolidated net income. During the year, the foreign currency strengthened against the parent company's currency and resulted in a translation gain. In this context, consider the impact of currency translation on XYZ's financial statements.

Which of the following statements about the impact on the financial statements is correct?