Sony Corporation reported the following in the summary of Significant Problems Accounting Policies included in the company's 2012 annual report on Form 20-F:
Translation of Foreign Currencies
All asset and liability accounts of foreign subsidiaries and affiliates are translated into Japanese yen at appropriate fiscal year end current exchange rates and all income and expense accounts are translated at exchange rates that approximate those rates prevailing at the time of the transactions. The resulting translation adjustments are accumulated as a component of accumulated other comprehensive income.
Receivables and payables denominated in foreign currency are translated at appropriate fiscal year end exchange rates and the resulting translation gains or losses are taken into income.
Required:
Explain in your own words the policies that Sony uses in reflecting in the financial statements the impact of changes in foreign exchange rates.