Why this is mistaken
Translation is not one rate applied to every account. Assets and liabilities generally use current rates, income-statement flows use appropriate period rates, and historical equity retains its rate history. Translate each line, then identify the balancing adjustment in OCI. The correction begins after functional-currency remeasurement is complete and does not send the translation adjustment to operating income merely to force articulation.
Where to watch
When this mistake may appear
- One closing-rate multiplication converts the foreign trial balance.
Check your work
Your work may contain this mistake if:
- Does not distinguish ending balances, period flows, historical equity, or the resulting translation adjustment.