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.
Foreign Currency Translation and Re-measurement. Both translation and re-measurement are based on multiplying the reported foreign currency balance times a fraction which is the value of desired currency/equivalent value of the foreign currency. In either case, there are two accounting problems to address: