Which of the following statements relating to foreign currency translation is false? The current rate method is used when a foreign operation has its own functional currency and it is necessary to translate amounts from the functional currency to the reporting currency used in the parent entity's consolidated financial statements. The application of the current rate method gives rise to cumulative translation adjustments which are reported as part of other comprehensive income. If a foreign entity has a recording currency that is different than its functional currency, it will be necessary to restate the enity's financial statements from the recording currency to the applicable functional currency and this will give rise to restate gains and losses recognized in the income statement. A foreign entity that operates in a country that has a high rate of inflation will have to translate its financial statements into the parent entity's reporting currency using the current rate method.