Jessica Schmitt

Intermediate Accounting Module 3

Chapter 4:

4-62:

1. Net Income
2. The currencies got weaker. The net foreign currency translator adjustment summarizes
gains/losses resulting from various exchange rates. If a foreign currency had gotten stronger in
comparison to the US dollar the adjustment would have been a gain. For example, say at the
beginning of the year (1/1/14) the exchange rate was $2 American for every 1 UK pound, and at
the end of the year (12/31/14) the exchange rate was $2.20 for every 1 UK pound. So $200 US
was invested at the beginning of the year (100 UK Pounds) it would be worth $220 at the end of
the year which is a gain.
3. It decreased in value. This type of security is reported at fair value, and changes in value
between accounting periods are included in comprehensive income until the securities are sold.
Therefore, because Coca Cola is reporting it as (7) it indicates that it was a loss.