Exchange Gains and Losses You are analyzing the financial statements of a distributing company that you know makes sales to customers in several foreign countries.

You are also sure that the sales are not always stated in dollars, so there is the possibility that the company has had exchange gains or losses. However, when you look at the income statement, no gains or losses on foreign currency transactions appear.

a. Is it possible that the company had no gains or losses?
Under what circumstances could this be the case?

b. If the company had exchange gains and losses, where are they most likely to be reported in the financial statements?
Where would you look in the annual report to try to find out more about the company’s foreign currency activities?