Impact of Currency Translation on Financial Statements

Very Easy Multinational Operations Impact On Financial Statements

In a multinational corporation, financial statements are influenced by various factors, including currency exchange rates. When a foreign subsidiary reports its financial results in a different currency than the parent company, these results must be translated into the parent company's reporting currency before consolidation.

Which of the following statements accurately describes the impact of currency translation on financial statements?

Currency translation effects are reported in the income statement.

Currency translation effects are reported in other comprehensive income.

Currency translation effects have no impact on the consolidated financial statements.

Hint

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