First off this question may seem confusing since you\u2019ve always shown those profits and losses as a part of one or the other or even something called \u201cnon operating income\u201d. One way or the other, there\u2019s also an option to split those results into two groups \u2013 one part of the operating results and the other as a part of financial expenses and income.\u00a0<\/p>\n
Why would someone do that? To be more fair to the results I\u2019d say. How come? Well, when you think about it \u2013 if all your currency translation losses for an example arise from the fact that you made a deposit in foreign currency would you want your operating results to be affected by this loss? Or vice a versa, if your translation profits arise from trading partly in foreign currencies with suppliers, would you want this result to be shown in financial income?<\/p>\n
To summarize and explain, in case you to decide to split those translation results it should be done based on the asset or liability they arose. If the item that was translated is related to operating the business (i.e. account receivables to customers, payables to suppliers etc.), it\u2019s part of the operating result. And consequently, if the item is not related to operating, it\u2019s translation results are shown as a part of financial income and expenses (i.e. loans taken or given in foreign currency and the profits or losses earned from those balances).<\/p>\n
As I said, the choice is yours, but do think before choosing one method \u2013 it\u2019s strongly suggested to keep consistency between reporting periods and if you do decide to change, make sure you also make amendments into prior year figures.<\/p>\n","protected":false},"excerpt":{"rendered":"
First off this question may seem confusing since you\u2019ve always shown those profits and losses as a part of one or the other or even something called \u201cnon operating income\u201d. One way or the other, there\u2019s also an option to split those results into two groups \u2013 one part of the operating results and the […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[25,73],"tags":[],"class_list":["post-3430","post","type-post","status-publish","format-standard","hentry","category-1-basic-accounting","category-1-18-foreign-currency"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts\/3430","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/comments?post=3430"}],"version-history":[{"count":2,"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts\/3430\/revisions"}],"predecessor-version":[{"id":3433,"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts\/3430\/revisions\/3433"}],"wp:attachment":[{"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/media?parent=3430"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/categories?post=3430"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/tags?post=3430"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}