genuinecfa

Multiple things happening here. Please follow along slowly. Very similar to what bpdulog has written above.

1. Current Rate Method
2. All A and L are translated at Current Rate
3. Equity as a whole which is (A-L) would also be translated at the Current Rate.
4. Common Stock, which is a part of equity, is by itself translated at the Historic Rate.

5. So a component of Equity (as a whole translated at Current Rate) is translated at Historic Rate.
6. An additional Component of Equity - the Retained earnings (assuming first year of operation) would be fully Net Income - translated at the Average rate.

How do 4, 5 and 6 tie together? By including the CTA (which could be a gain or a loss) in the Equity.

Does that make sense?

CP