Translation Loss/Gain on Balance Sheet

[blackscholesvol]

If FC strengthens and you have a net asset -> Translation GAIN
If FC strengthens and you have a net liability -> Translation LOSS
if FC weakens and you have a net asset -> Translation LOSS
If FC weakens and you have a net liability -> Translation GAIN
How is the net asset/net liability defined in this context?

 

[clangerh]

I believe it would first depend if the functional was the presentation/reporting currency, the local currency, or some other currency…

 

[Mosstastic]

If you’re using Current Rate method then the net asset would be defined as Assets - Liabilities. Generally speaking, most companies operate with a Net Asset (has positive equity)
Under the Temporal Method you’re looking at Net Monetary Assets / Liability, I believe it’s (Cash + AR) - (CL + LTD)

 

[nitish3861]

Thank you Mosstastic, you are right….