A sale of goods, denominated in a currency other than the entity’s functional currency, resulted in a receivable that was fixed in terms of the amount of foreign currency that would be received. Exchange rates between the functional currency and the currency in which the transaction was denominated changed. The resulting gain should be included as a
A. Translation gain reported as "other comprehensive income" and a separate component of stockholders’ equity.
B. Translation gain reported as a component of income from continuing operations.
C. Transaction gain reported as "other comprehensive income" and a separate component of stockholders’ equity.
D. Transaction gain reported as a component of income from continuing operations.
Answer:D
This answer is correct because ASC Topic 830 states that the increase (decrease) in expected functional currency cash flows is a foreign currency transaction gain (loss) that shall be included in determining net income for the period in which the exchange rate changes. The gain (loss) is shown on the income statement under other income as part of income from continuing operations. 一般来说，如果题目中只提及单项交易，那么该交易常常属于foreign currency transaction gain/loss的范畴. 从本质上说，由于该笔交易的货币和企业的functional currency不同，所以这项交易不能归类为foreign currency translation，只能归属于foreign currency transaction或者remeasurement。