Prophylactic: A preventive measure. The word comes from the Greek for an advance guard, an apt term for a measure taken to fend off a disease or another unwanted consequence. A prophylactic is a medication or a treatment designed and used to prevent a disease from occurring.
Changes in functional currency amounts that result from the measurement process are called transaction gains or losses; transaction gains and losses are included in net income. Foreign currency translation is the process of expressing a foreign entityâs functional currency financial statements in the reporting currency. Translation adjustments are included in the cumulative translation adjustment (CTA) account, which is a component of other comprehensive income.
2. the entity translates all foreign currency items into its functional currency. 3. the entity reports the effects of such translation in accordance with paragraphs 20-37 [reporting foreign currency transactions in the functional currency] and 50 [reporting the tax effects of exchange differences].