Current Rate Method and Temporal Method: Effect of Currency Exchange Rate Movement on Financial Statements

Foreign currency strengthens relative to parent's presentation currency

	Current Rate Method	Temporal Method	Temporal Method
Exposure	Equity	Net Monetary Asset	Net Monetary Liability
Revenues	↑	↑	↑
Assets	↑	↑	↑
Liabilities	↑	↑	↑
Net income	↑	↑	↓
Shareholders' equity	↑	↑	↓
Translation loss/gain or Positive/negative translation adjustment	Positive translation adjustment	Translation gain	Translation loss

Foreign currency weakens relative to parent's presentation currency

	Current Rate Method	Temporal Method	Temporal Method
Exposure	Equity	Net Monetary Asset	Net Monetary Liability
Revenues	↓	↓	↓
Assets	↓	↓	↓
Liabilities	↓	↓	↓
Net income	↓	↓	↑
Shareholders' equity	↓	↓	↑
Translation loss/gain or Positive/negative translation adjustment	Negative translation adjustment	Translation loss	Translation gain