Foreign Currency Translation

Process of expressing amounts denominated in one currency in terms of a second currency, by using the exchange rate between the currencies. Assets and liabilities are translated at the current exchange rate at the balance sheet date. Income statement items are typically translated at the weighted-average exchange rate for the period.

Process of expressing amounts denominated in one currency in terms of a second currency, by using the exchange rate between the currencies. Assets and liabilities are translated at the current exchange rate at the balance sheet date. Income statement items are typically translated at the weighted-average exchange rate for the period. Cumulative (total) translation gains and losses are reported separately as a component of Stockholders' Equity under "Accumulated Other Comprehensive Income." They are not included in net income unless there is a sale or liquidation of the investment in the foreign entity. See also Foreign Currency Transaction.