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TeachMeFinance.com - explain Foreign currency transaction gains and losses Foreign currency transaction gains and losses The term 'Foreign currency transaction gains and losses' as it applies to the area of energy can be defined as ' Gains or losses resulting from the effect of exchange rate changes on transactions denominated in currencies other than the functional currency (for example, a U.S. enterprise may borrow Swiss francs or a French subsidiary may have a receivable denominated in kroner from a Danish customer). Gains and losses on those foreign currency transactions are generally included in determining net income for the period in which exchange rates change unless the transaction hedges a foreign currency commitment or a net investment in a foreign entity. Intercompany transactions of a long-term investment nature are considered part of a parent's net investment and hence do not give rise to gains or losses'. Previous 5 Terms: Forecast Point Forecast valid for Foreign access Foreign Agricultural Service (FAS) Foreign Assignee Program Next 5 Terms: Foreign currency translation effects Foreign Market Development Program (FMDP) Foreign operations Foreign-controlled firms (coal) Forensics About the author Mark McCracken Author: Mark McCracken is a corporate trainer and author living in Higashi Osaka, Japan. He is the author of thousands of online articles as well as the Business English textbook, "25 Business Skills in English". Copyright © 2005-2011 by Mark McCracken, All Rights Reserved. TeachMeFinance.com is an informational website, and should not be used as a substitute for professional medical, legal or financial advice. Information presented at TeachMeFinance.com is provided on an "AS-IS" basis. Please read the disclaimer for details.